Back in June 2024, CDK Global, a top company providing software to car dealerships, faced a big ransomware attack. This hit about 15,000 dealerships across North America. For weeks, these businesses had to stop using their usual systems and rely on pen, paper, and quick fixes during a crucial sales period. The result? They lost over a billion dollars, according to reports from the industry.
More than a year on, the challenges for car dealerships in the US have only grown. Rajni Kapur, CEO of All Solutions Insurance — a company that specializes in insuring auto dealers — describes the situation as a “perfect storm.” Risks like cyberattacks, data theft, vandalism, and staffing shortages are all happening at once.
The attack on CDK Global was alarming but also raised awareness about cybersecurity. Since then, many dealerships have started taking online security seriously. They’re encrypting financing documents and training their staff to spot phishing scams. More dealers have also started buying cyber liability insurance, which wasn’t always a priority before.
Insurance companies have tightened their rules for dealerships. Now, dealers must fill out detailed cyber risk applications, use multi-factor authentication, provide regular employee training, and limit who can see sensitive customer data. Some insurers even call the dealership’s cyber managers directly to check if they are following these rules. If not, they risk losing their insurance coverage.
While cyberattacks mostly target financial information, car theft remains a big problem, especially for electric vehicles and other pricey models. Popular cars from brands like Kia, Hyundai, and Cadillac are often stolen, along with catalytic converters. These thefts can cost dealers a lot of money.
One major weakness is how dealerships manage car keys. On busy lots, keys get lost or misplaced, letting unauthorized people take vehicles without permission. Insurance experts suggest dealerships use locked cabinets that control and track who uses keys, limit access to expensive cars, stop unauthorized test drives, and keep high-value inventory in secure spots. Adding motion sensors and increasing nighttime security patrols also helps.
Insurers don’t look kindly on dealerships with repeated theft problems. While one loss might be okay, multiple incidents could lead to canceled policies or tougher insurance terms.
During the holiday season, dealerships see more visitors and more test drives. This brings extra risks. Crowds can help thieves sneak in, and more cars moving around means more accidents. Many employees are new or fewer in number, which adds to the chances of damage when moving cars on the lot. Slip-and-fall accidents also rise with the crowds. Weather adds another layer of risk with storms causing wind damage, flooding, hail, and debris hitting cars on open lots or inside showrooms.
With all these risks coming together, Kapur advises insurance agents and brokers to take a close look at what coverages dealerships currently have. Open lot coverage, which protects against weather damage, theft, vandalism, and on-site collisions, is especially important. It’s critical that vehicles, especially the most expensive ones, are insured for their full value.
Garage liability and garage keepers liability are also must-haves. Sometimes dealers overlook garage keepers coverage, which protects customer cars left at the dealership. Bigger dealerships should look at umbrella policies with limits from $2 million up to $10 million for the largest businesses.
Kapur often finds gaps in current insurance policies when reviewing them and encourages dealers to add any missing coverage. With the rising threats, having a solid and complete insurance plan is more important than ever for car dealerships.