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The Year Ahead for Automobile Dealers


Although this is a busy time of year for everyone, it is also a good time to take a step back and reflect on the past year — as well as prepare for the year yet to come. The new year will undoubtedly bring fresh challenges concerning insurance and risk management, so it is always best to plan ahead and proactively work to reduce your exposures now.

There was good news for the Canadian auto industry in 2015 as it continued to surpass financial expectations despite a growing number of global economic issues. However, 2015 was also a year that highlighted the need for Canadian auto dealers to stabilize their insurability and coverage costs for the future through strategic risk management and a reduction of their exposures. With this in mind, dealers should embrace specific actions aimed at helping to control claims costs and ensure that the following preventative measures are taken:

  • Exterior and interior maintenance of your facilities:
    • Fire doors and fire shutters – These should be inspected regularly and always be in proper working condition.
    • Fire extinguishers and fire systems – Regular inspections are crucial to ensuring this equipment is ready when needed.
    • Signs and light standards – Ensure they are secure and well-maintained. No one wants the next high-wind event to shake a sign loose and cause injury or damage.
    • Drainage basins – Keep them clear of debris to reduce the risk of flooding and subsequent frozen ice patches.
    • Snow removal plans – Be ready for the first snowfall. A good snow removal plan will help reduce the risk of slip and fall injuries.
    • Thermostat – Remember to maintain temperatures in all buildings during closed periods over the holidays. This will help reduce the risk of frozen and burst pipes.
  • Vehicle fleet – Your customers will usually bring their vehicles in for maintenance before winter weather starts and dealers should definitely service their own fleet at this time as well.
  • Promote defensive driving techniques – We want everyone to be safe and enjoy the holidays with family and friends.

Of special note, while we try to stay one step ahead of the criminals, we also often learn of the latest trends from actual claims activity. We are increasingly seeing the theft of vehicles even with electronic start systems. To facilitate the copying of the vehicle’s electronic start code, the thief will use the key fob to start the vehicle a couple of times and electronically record the code with a computer or tablet device. The thieves then return to the dealership at an off hour, and drive the vehicle away. One of the best ways to prevent this type of activity is going back to the basics in key control during a test drive, and ensuring that the “customer” is not left alone with the vehicle. Other test drive best practices should include:

  • Always maintaining control of the vehicle key.
  • Beginning any test drive with the sales person in the driver’s seat as this allows the customer to appreciate the ride of the vehicle while the sales person points out the vehicle’s features.
  • At a half-way point, the vehicle should be parked, the sales person should remove the key, and the customer should take the driver’s seat. At this point, the sales person can re-insert the key, if necessary.
  • When returning to the dealership, the vehicle should be parked in such a way that it will have to be moved again after the customer has left the dealership, thus reconfirming that a key switch has not taken place.

Ask your insurance broker for a test drive procedure checklist for further best practice advice.

Dealers should also review several of their internal documents to ensure they are up-to-date with current loss prevention best practice advice that may help prevent future claims. These documents should include, but are not limited to:

  • Employment manuals.
  • Demonstrator agreements.
  • Temporary substitute vehicle forms.
  • Employment files.

The Coverage and Protection (CAP) Dealer Insurance Solutions Program issues a complete internal risk control manual for its client dealers to utilize. We are also suggesting that dealers consider the creation of emergency plans, and that these plans be documented, discussed, and reviewed on a semi-regular basis.

Your trusted risk management advisors at Marsh Canada would like to wish everyone a safe and happy holiday season. We look forward to sharing more insurance insights with you in 2016!