CAN YOU AFFORD THE RISK?

1. CAN YOU AFFORD THE RISK? A discussion on todays changing claims scenarios in the automotive business * Todd Shepard – Shepard & Shepard Insurance

2. Types of coverage most affected • Garage liability AUTO • Garage liability PREMISE • Employment Practice Liability

3. Garage Liability - AUTO Recent distracted driver rear-end pay-outs • Owner let son drive auto, caused multi car accident $38,500 POLUICY NOT INTENDED TO REPLACE PERSONAL POLICY • Owner hired ‘temporary 1099 worker’ – rearended auto- driver has suspended license, left scene. $12,600 LACK OF DUE DILIGENCE • Owner hired new employee, same day sent him in pickup causing rearend accident $20,500 LACK OF TRAINING • #1 cause of accidents: DISTRACTED DRIVING

4. Garage Liability – AUTO #2 cause of loss - LACK OF CONTROL -Employee dropped off car to new customer and picked up the trade-in. Allowed to keep the car for the evening instead of returning to the dealership as a matter of convenience. Became intoxicated, lost control at high speed leaving roadway and striking a picnic table with a girl sitting on it. Claim still pending at $100,000 + payout and totaled $16,000 vehicle - Employees personal insurance denied claim because it was determined he was operating a company owned vehicle and therefore company was held ‘primary’ even though off duty.

5. Garage Liability – AUTO #2 cause of loss - LACK OF CONTROL -Employee driving lot vehicle to lunch during snow and ice weather because his personal auto was not good in snow. Lost control forcing another auto off the road and multi car slow speed accident $19,500

6. Garage Liability – AUTO #2 cause of loss - LACK OF CONTROL -Employees and manager took shots of alcohol in the office. Two employee then left for the day. Manager instructed them to return after work with another bottle. Employees (driving their own auto) went to a bar then liquor store and returned a high speed striking another car causing fatality and injury. Dealer sued based on premise that manager had instructed them to return and therefore still acting in the course of duty. $4MM (dealer had chosen an UMBRELLA option)

7. Garage Liability WHAT CAN YOU DO? • No cell phone use while driving • No alcohol • Screen ALL applicants and contract workers with motor vehicle report • No personal use of company autos • Institute a punch clock for all employees to show when off duty • Require all employees to have a personal auto policy • Consider an UMBRELLA policy for higher limit claims

8. Garage Liability – PREMISE and BROADENED Broadened coverage includes ‘Personal Injury’ coverage. Recent claims: -Female customer applied for a car loan and was declined. Salesman was a ’contract worker’ and was the only person at the lot during the transaction. Her attorney filed claim that the salesman has made inappropriate sexual comments and sued the dealer. $80,000 pay out

9. Garage Liability – PREMISE and BROADENED Broadened coverage includes ‘Personal Injury’ coverage. Recent claims: -Dealer took a trade in on an auto without the physical title. Customer failed to produce title. Dealer convinced customer to come to the lot, took the keys, and gave them back their trade-in keys. One party drove off with the ‘trade’ leaving the other party. Dealer refused to offer a ride home. Attorney filed suit that the dealer held customer hostage. $50,000 pay out.

10. Garage Liability – PREMISE and BROADENED Broadened coverage includes ‘Personal Injury’ coverage. Recent claims: -Dealer set up an offsite sale at a local mall. The mall placed orange cones outside the dealers leased space. A mall customer tripped on a cone causing bodily injury. The dealer claimed the mall owned and placed the cones. The mall claimed the cones were only there because the dealer was there. Dealer policy pay out $19,200 with reserves still open (injured party seeking $250,000)

11. Garage Liability – PREMISE and BROADENED Broadened coverage includes ‘Personal Injury’ coverage. ‘Avoided claim’ -Customer filed a complaint that she tripped on a ramp that was sticking out from an auto on the lot causing bodily injury. Dealer produced clear video footage of what appears to be an intentional fall. Claim was dismissed.

12. Garage Liability – PREMISE and BROADENED What can you do? -Ensure all slip and fall hazards as removed. Properly stow hoses, ramps, jacks, tires, etc. -Immediate snow and ice removal, stock up on ice melt before winter -If needing to create a border use tape, not cones. - Consider installing video cameras in and outside • Be cautious allowing a male to take a test drive alone with a female. Use a recording device in this type of scenario (obtain permission from all parties) • Never roll a car without trade-in title or other required paperwork.

13. Employment Practice Liability (EPLI) This coverage includes violation of employment laws, harassment or hostile work environment including sexual harassment, humiliation, offensive actions, and unwelcome advancement. Also negligent hiring and negligent supervision.

14. Employment Practice Liability (EPLI) Recent claims Employee claimed the spouse of the manager entered the place of employment and yelled at her accusing her of having an affair with her husband. Payout $50,000

15. Employment Practice Liability (EPLI) Recent claims Employee alleged that off color jokes and sexually explicit comments were allowed by management in the workplace causing her to suffer extreme sexual discomfort. Payout $150,000

16. Employment Practice Liability (EPLI) Recent claims Employee complained that he was shorted commissions owed when terminated. He had a couple deals pending and dealer refused to pay. Employee was awarded full pay and dealer also paid for defense out of pocket as it was less than his $10,000 deductible

17. Employment Practice Liability (EPLI) What can you do? -Consider purchasing an EPLI policy even if you only have a few employees. -institute a no tolerance policy on derogatory or sexual explicit jokes and emails. -Follow all labor laws when hiring and firing- • Have terminated employee sign a document acknowledging he or she has been paid in full- address discrepancies immediately. • DOCUMENT EVERYTHING

18. Shepard & Shepard Insurance we insure AUTO DEALERS – AUTO SHOPS – RENTAL AGENCIES www.shepquote.com 855-396-0488