Top 5 risk management issues for dealers

This article was written by Zach Materne, a Property & Casualty risk consultant for Apiar Commercial Risk Management.

For more than two decades, I’ve lived and breathed the exhilarating world of the powersports industry, from the vibrant showroom floor to the dynamic intricacies of commercial insurance.

As the co-founder of my family business TTRNO, a premier European motorcycle dealership in New Orleans, I reveled in my daily interaction selling the dream and working with enthusiasts. After the sale of our dealership in 2019, I began a new chapter – working in commercial insurance, specifically addressing the unique needs of powersports dealers. My mission is clear: to be an advocate, not just for individual clients but for the powersports industry as a whole.

In all my years in 20−Clubs, and engaging peers at dealer events, if a Commercial Insurance topic arose, there seemed to be very few places to turn for advice or expertise. When I was given the opportunity to evolve my career to commercial insurance, I knew that I could help solve this problem.

It was a profound shift from the adrenaline-fueled world of motorcycle sales to the nuanced realm of risk management. However, the core motivation remained constant: a dedication to ensuring the prosperity of an industry that had been my home for almost two decades. Now, as an advocate for powersports professionals, I want to shed light on the critical issues that dealers grapple with when building their risk management strategy. Here are the top five issues that I see in the market:

Beyond commodity: Elevating insurance to a risk management strategy

One of the prevailing challenges in the powersports industry is the tendency to view insurance as a mere commodity – a necessary but cursory expense. The reality is that insurance should be seen as a strategic pillar of risk management. Too often, dealers may opt for the easiest path without considering the unique risks they face.

I encourage my colleagues to transcend this perspective, recognizing insurance not as a checkbox on a to-do list, but as a proactive investment in the long-term resilience of their business. This industry puts so much emphasis on training F&I staff to protect their customers’ assets, but dealers themselves are less likely to protect their own assets with the same enthusiasm.

Annual reviews: A crucial lens on property coverage

The powersports industry is dynamic, with inventory values, building values and business landscapes in constant flux. Yet, it’s surprising how often dealers neglect the annual review of policy limits, especially in property coverage. This oversight can lead to underinsurance, leaving dealers vulnerable to unforeseen events.

An in-depth annual review ensures that policies align with the current value of assets and provide adequate coverage against potential risks, safeguarding dealerships from financial setbacks in the event of a claim.

Your broker: The unsung advocate in the market

Your insurance broker is more than just a middleman facilitating transactions. They are your advocate in the market, working tirelessly on the front lines to secure the best possible coverage for your specific needs. The effort you invest in selecting the right broker pays off in better results.

By cultivating a strong partnership with a broker who understands the powersports industry intricately, you ensure that your interests are represented in negotiations. This proactive approach can lead to more tailored and comprehensive coverage, providing a safety net for your dealership.

False pretense coverage and cyber exposure: Emerging threats in the digital age

As our businesses move increasingly into the digital realm, two emerging challenges demand attention – False Pretense Coverage and Cyber Exposure. False Pretense Coverage protects against losses resulting from a person posing as a customer with the intent to deceive the dealership. In the age of digital transactions and interactions, this coverage is crucial.

Similarly, the powersports industry is not immune to cyber threats. Cyber Exposure coverage is essential to protect against potential losses arising from data breaches, hacking or other cyber-related incidents. Acknowledging and addressing these modern threats is key to a comprehensive insurance strategy.

Navigating the waters of employee practices liability

Employee practices liability is a facet often overlooked by powersports dealers. In an industry where close-knit teams are common, it’s essential to be aware of the potential employment-related risks. Issues like wrongful termination, discrimination or harassment claims can have severe consequences. Powersports professionals should consider incorporating employee practices liability coverage into their insurance portfolio, safeguarding against legal challenges that could arise from interactions within the dealership team.

My journey from the showroom to commercial insurance was more than a career shift—it’s a commitment to ensuring the powersports industry’s continued vibrancy. Through these insights, I hope to offer a unique perspective to both my fellow powersports professionals and the broader community.