Modern times come with fresh risks and liabilities — and updated insurance policies to protect against such perils.
“The new risks range from identity theft to F&I (finance and insurance) compliance issues,” says Steve Cline, marketing director for Zurich North America Commercial Direct Underwriters business unit, specializing in coverage for motor-vehicle dealers.
“Crooks are getting smarter and there is also more legislation to keep up with,” he says.
For example, dealership F&I offices often are exposed to potential identity theft.
That's because sensitive customer information is on forms, entered repeatedly into computers and “floats from person to person,” Cline says. “We've developed coverage in the event of a lawsuit when that information is mishandled.”
Some of the updated coverage includes terms that are relatively new. Specifying them makes policies clearer.
For instance, the term “identity theft” now is part of Zurich's enhanced Unicover VI policy's language. “It wasn't defined before,” Cline says. “It might have come under ‘invasion of privacy,’ but that's a broad term.”
New insurance protection also deals with “can-spam” violations, including the sending of e-mails with misleading subject headings and failing to include an opt-out process.
Also new is coverage relating to eight specific recent government statutes, violations of which could result in lawsuits.
One of those is a post-9/11 law — an outgrow of “consorting with the enemy” legislation, commonly known as OFAC (Office of Foreign Assets Control) — that requires dealers to check to see if customers are on a government list of terrorists and drug dealers.
The Unicover VI policy also insures financial losses stemming from computer viruses, hackers and intentional data overloads that can shut down a dealership.
It also includes a new insurance term: “electronic vandalism” compared with just vandalism. Cline says some insurers with simple vandalism coverage might balk at extending it to include computer hacking or the like.
It is part of a changing world, and the need for insurance coverage to change with it.
“It's similar to when sexual-harassment coverage was once considered cutting edge a couple of decades ago,” Cline says. “Now it's part of standard coverage.”