Cybercrimes are on the rise, and used car dealerships are increasingly becoming targets for hackers. As dealerships rely more on digital transactions and store sensitive customer information, they become vulnerable to various cyberattacks, including data breaches, ransomware, and phishing schemes. For insurance retailers, offering robust protection through used car dealer insurance programs that include cyber liability coverage is essential to safeguard clients against these threats.
Why Used Car Dealerships Are Prime Targets for Cyber Crimes
Used car dealerships store a wealth of sensitive data, such as customer financial information and personal identification details, making them prime targets for cybercriminals. As dealerships transition to digital systems for transactions and record-keeping, the risk of cyberattacks grows.
Consider the recent cyberattack on CDK Global, a major software company providing internal software systems for roughly 15,000 dealerships. The attack disrupted operations at thousands of car dealerships across the United States and Canada, illustrating how widespread and damaging such attacks can be. This disruption not only impacted daily operations but also led to significant financial and reputational harm for affected dealerships.
The increasing sophistication of cybercriminals means that dealerships must be proactive in securing their operations. With phishing scams, ransomware, and unauthorized access becoming more common, a lack of adequate cybersecurity measures can lead to disastrous consequences.
The Impact of Cybercrimes on Used Car Dealers
The financial and operational repercussions of cyberattacks on used car dealers can be devastating. As Digital Dealer reports, cybercriminals can steal sensitive information, hold systems hostage through ransomware, or exploit security gaps, leading to a cascade of issues, including:
- Financial losses: Costs can add up quickly, from paying ransoms to recover systems to footing the bill for legal fees due to data breaches. On average, ransomware attacks cause an average payout of more than $250,000, with dealerships facing extended downtime of 16 days while systems are restored.
- Reputational damage: Dealerships that suffer a breach often lose customer trust, which can take years to rebuild. A report found that 84% of customers would not return to a dealership to buy another vehicle if their data were compromised in a cyberattack.
- Operational disruptions: A successful cyberattack can render a dealership unable to process transactions, access customer records, or continue daily operations. Some 46% of dealerships report experiencing a cyberattack or incident that had a negative financial or operational impact.
Many dealerships are also unprepared for the “peopleware” aspect of cybercrime prevention, often neglecting critical cybersecurity training and awareness among employees.
Cyber Liability Insurance: A Critical Part of Used Car Dealer Insurance Programs
Given the increasing rate of cyberattacks, cyber liability insurance is an essential part of a comprehensive used car dealer insurance program. This specialized coverage can help dealerships manage the fallout of a cyberattack, including covering the costs of:
- Data breach notification and recovery services
- Legal fees from lawsuits related to data breaches or regulatory violations
- Ransomware payments and system restoration
For insurance retailers, offering cyber liability insurance as part of their used car dealer programs protects clients from the financial and operational risks posed by cyberattacks.
If you’re looking to provide top-tier cyber liability coverage to your clients, Aegis General Insurance Agency’s Specialty Dealer Division offers a wide range of solutions. Partnering with Aegis gives dealerships access to modern, efficient insurance programs, including ACH payment capabilities. It also ensures that they have the right coverage to protect against the unique digital threats they face.
Safeguarding the Future of Used Car Dealerships
As cyberattacks on used car dealerships become more frequent and sophisticated, insurance retailers must step up to provide their clients with the protection they need. Cyber liability insurance is an essential part of used car dealer liability insurance programs, ensuring that dealerships can continue to operate safely in an increasingly digital world.
Insurance retailers can take advantage of Aegis’s comprehensive cyber liability programs to offer clients cutting-edge protection against the growing threat of cyberattacks. Partner with us to offer your dealership clients the protection they need against today’s cyber threats.
About Aegis General Insurance Agency
Aegis General Insurance Agency — Specialty Dealer Division strives to create a leading underwriting and distribution franchise in the program insurance market. We’ve bridged the gap between agents and client payments with our efficient ACH payment system. Partnering with us gives agents the advantage of ACH payment capability, allowing for direct billing through the firm. Call us today at (866) 429-1638 to find out how you could partner with K2 to offer top-tier insurance coverages and modern features to your clients.
