to the customer. The claim was settled for close to the amount of the vehicle! • Under Georgia law, if a new vehicle incurs paint damage that exceeds $500 and/or damage that costs 5% or more of MSRP to fix, such damage must be disclosed prior to delivery. Even if damage does not meet this statutory threshold, it is advisable to disclose known prior damage. Real Claim Example: A sales manager wrecked a demonstrator vehicle. He did not want the dealership to be aware of the accident, so he had the vehicle fixed. The vehicle was sold without disclosing the damage. The customer became aware of the prior damage and sued the dealership. A violation of this law is a per se violation of the Georgia Fair Business Practices Act, which allows for treble damages. • Completed operation claims can become your largest exposure, so it is critical to have procedures in place, such as another technician or supervisors checking any drivability or safety repairs. Real Claim Example: A customer had a vehicle in for repair and the dealership did not properly tighten the lug nuts. Due to a technician’s failure to properly tighten the lug nuts, the customer ended up in an accident. If another technician or supervisor had checked this job, the issue would have been caught and resolved. Tragically, the customer was seriously injured in this accident. This was a major liability claim! • Vehicle thefts continue to increase across the U.S. In the last several years, vehicle theft has increased by roughly 25%. This, combined with the increased value of vehicles, makes this a significant loss to auto dealerships. It is up to each dealership to tighten up vehicle security with well-functioning key machines. It is important not to provide key fobs to customers on test drives and to wait to deliver the keys to the customer once the sale has been completed. In addition, dealerships should be compliant with federal Red Flags Rule and have identity verification procedures in place. Real Claim Example: A customer had purchased a “high-end” used vehicle. The dealership failed to address typical red flags, such as the request to deliver the vehicle to an address other than the address on the driver’s license and inadequate proof of insurance. This claim cost the dealership over $100,000. Lawsuits are on the rise, and you need to make sure that your dealership is avoiding potential exposures in the best way possible. Please do not hesitate to contact me or any member of my insurance team if we can be of any assistance or answer specific insurance questions. SHAWN PRESNELL Managing Director of Insurance (678) 428-9247 | shawnp@gada.com FELIX JACKSON P&C Account Executive Atlanta/North GA (770) 570-8212 | felixj@gada.com DAVID CREW P&C Account Executive Middle/South GA (470) 303-9051 | davidc@gada.com 17 THE GENERATOR
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