Navigating cybersecurity events: A dealer’s guide to insurance claims

This article was originally published in the AIADA’s First Up email distributed Sept. 24, 2024.

In today's digital age, cybersecurity is a top priority for businesses of all sizes. Unfortunately, as recent events have highlighted, even with the best security measures in place, dealers can still experience data breaches and cyber-attacks.

Successfully overcoming a cybersecurity event, mitigating damages, and recovering losses requires swift action by dealers, which can be difficult during and directly after the crisis. However, with the right guidance and support, dealers can take the necessary actions to protect their assets and move forward with confidence.

Below are three impactful actions dealers can take to help overcome insurance claim challenges related to cybersecurity events.

Determine insurance coverage

Determining if the dealer’s insurance policy specifically covers cybersecurity events should be the first step. If so, contact the insurance provider immediately. If there isn’t insurance coverage, contact legal counsel to explore potential paths to recovery through a third party.

Contact insurance provider

Once the dealer has contacted the insurance provider, they’ll be informed of the claim’s validity. If the claim is denied, contact legal counsel to explore options.

If the claim is valid, the insurance adjusters will, most likely, determine the claim amount. However, the dealer has the right to hire a claim expert, likely at their own cost. Hiring an expert can help in the assessment of the adjuster’s proposed settlement amount.

Assess potential claim

In assessing the potential claim, the dealer must consider the language in the insurance policy which may address lost revenue, mitigation and other expenses, third-party recovered amounts, and the business’ obligation to mitigate losses. Each dealer’s situation will be different, and it’s important to have a professional advisor that’s familiar with the industry.