GADA Insurance Services has a comprehensive database of information on property and casualty claims and loss trends in Georgia. We have seen what losses are on the rise in Georgia and want to make our dealers aware of these loss trends and how to prevent them from happening to your dealership.

Auto Accidents

Auto accidents are the loss leader for many dealerships. At-fault rear-end collisions make up more than 50% of the auto accidents from dealership employees. In most auto accidents, the bodily injury (BI) loss paid exceeds the physical damage (PD) loss on the vehicle. Lawsuits for BI are on the rise and even minor auto accidents with limited BI can be expensive! It is not uncommon for the BI on a minor accident to pay more than $50,000.

The following are ways to avoid rear-end collisions:

• Look farther up the road to spot traffic stopping long before the vehicle in front of you slams on its brakes. This gives you time to stop along with the cars behind you.
• Check your mirrors more often. This will alert you to someone riding too close to you and give you a warning to leave more space in front of you. You might be better off letting that tailing vehicle pull around and pass you.
• Stay focused on driving and do not become distracted. Limit your cell phone use.
• As you slow down to stop, look for an escape route to be able to get out of the way of a vehicle behind you that is not paying attention. Make sure your brake lights are working properly. Leave extra space between you and the vehicle in front of you.

Auto Theft

Most auto thefts result from dealerships not following sound procedures in key control, dealing with wholesalers and verifying customers’ identities. Key control involves securing keys in a device, keeping keys out of the hands of potential thieves and keeping keys secured while not being used. Theft of vehicles by wholesalers who get into financial trouble can become a potential risk. With identity theft being on the rise in both metro and non-metro areas, it’s important to tighten up your dealership’s policies.

The following are ways to avoid auto theft:

• Keys to dealership and customer vehicles should be secure when the keys are not being used. No keys should ever be left unattended on a desk. Key machines are a better solution than a keyboard. With key swapping, it is important to not provide keys to prospective buyers — with the salesperson in the vehicle with a key fob, the customer does not need to have possession of your keys.
• Wholesalers get into financial hardship and may attempt to get a dealership to surrender the vehicle and title before payment has been made or cleared. We have seen dealerships incur losses in the hundreds of thousands of dollars in this area and, depending on your insurance contract, this may not be a covered loss.

The following are ways to avoid identity theft or false pretense claims:

• Identity theft is on the rise. It is important that your salespeople and managers be trained to spot an altered ID or driver’s license. Remember, if something seems too good to be true, it probably is. Driver’s license scanners can help prevent false identity. Be very cautious of out-of-state deals if the customer is not willing to come to your dealership to pick up the vehicle.
• Train managers on the red flags of potential identity theft claims. Vehicles that are sold virtually should require a manager’s review and approval.
• Even the most experienced salespeople, managers and F&I professionals may not be able to uncover a false identity scheme. Therefore, you may want to contract with a company that specializes in the avoidance of false identity claims.

Employment Practices Liability (EPL)

Discrimination, harassment and wrongful termination claims are always a challenge in the business environment, and while many of these claims are without merit, you still must defend your dealership. Most EPL claims are against managers and occur following termination. Following the law for FMLA and ADA is critical to keep your dealership from having an EPL claim. If your dealership employs 50 or more employees, you are subject to FMLA. If your dealership employs 15 or more employees, you are subject to ADA law under Title I. However, all sizes of employers are subject to the ADA Title III for ensuring accessibility for people with disabilities in places open to the public. Many of these EPL claims can be avoided or minimized by following sound business practices with employees and managers.

The following are ways to avoid EPL claims:

• Train all managers in employment practices to include the best practices for hiring and termination procedures. This should be done with all new managers when they are hired and updated annually.
• Develop proper hiring and termination procedures. Check with a labor attorney if in doubt. Document the employee’s deficiencies “in writing” along the way and ensure they are aware that they are not meeting expectations before termination.
• Have a no-tolerance sexual harassment and discrimination policy and enforce it.
• Thoroughly investigate all complaints and take appropriate action.
• Make sure that your dealership’s no-harassment and no-discrimination policy is in writing and signed by all employees and clearly outlines how to report a complaint.