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Powersports Business • October 2024 • 15

BY BRAD STANEK AND PAULINA MATEL CONTRIBUTING WRITERS

Ask ten ‘ wealth managers ’ to define wealth management , and you ’ ll likely receive ten different answers , mostly centered around investing . However , in this article series , we aim to present an alternative , comprehensive definition on wealth management that encompasses a full spectrum of strategies which we call Advanced Planning . While proper investment consulting is crucial for generating portfolio returns , what if we include tax minimization , thoughtful estate planning , and wealth protective strategies as well , to propel your wealth forward ? We classify these strategies into four pillars : Wealth Enhancement , Wealth Protection , Wealth Transfer , and Charitable Giving . Join us for a four-part article series where we delve into strategies for wealth planning in each of these crucial areas .

IMPORTANCE OF PROPER COMMERCIAL AND PERSONAL INSURANCE REVIEWS

In the fast-paced , ever-evolving world of powersports dealerships , safeguarding both personal and business assets is paramount . Regularly reviewing and updating insurance policies is one of the simplest yet most effective strategies for protecting against potential financial disasters . From liability lawsuits to inadequate commercial coverage , the risks are numerous , and stakes are high . By ensuring that your insurance plans are comprehensive and up-to-date , dealers can mitigate these risks and secure their wealth . In this article , we spoke with Zachary Materne , Commercial Property & Casualty Risk Consultant with Apiar Commercial Risk Management ( LA Resident License # 871096 Cell Brokerage CA LIC . # OG83985 , NPN # 14775635 ) explores common challenges and pitfalls dealers encounter , emphasizing the critical importance of diligent insurance management .

UMBRELLA AND EXCESS COVERAGE

Materne emphasizes the importance of “ building a tower that protects you for the worst possible scenario .” Umbrella insurance is vital for protecting your business assets . It provides additional liability coverage beyond the limits of your existing policies . In cases where you ’ re at fault for injuries or damages and your primary policies fall short , an umbrella can step in to cover the remaining costs . As a dealer , you likely own multiple entities – your dealership operations , and real estate . Many dealers establish an umbrella liability policy but fail to regularly review the policy limits . The general rule of thumb is that your umbrella liability coverage cover all contractual obligations . When determining your limit you should begin by exploring what the market can bare , and what your business can afford . An umbrella policy can be invaluable in incidents , such as injuring someone , your completed operations in your service department damaging someone else ’ s property , and landlord liability . Common examples include a customer slipping on your dealership property or an employee causing a serious accident while driving a company vehicle .

FALSE PRETENSE COVERAGE One lesser-known , or often underinsured area is false pretense coverage – which covers a dealer in the event of a fraudulent transaction taking place . “ You might have great risk controls in place , but one fraudulent transaction might slip through the cracks , and it can take months to discover between the bank and the dealership ,” Materne explains . This coverage is critical because once a fraudster is aware that they can get away with a false transaction – they will come back and try again . In the worst case scenario , we discussed the example of a dealer who had seven bikes stolen over the course of a year and a half . In this case and many like it , if the value of the inventory lost exceeds the false pretense coverage , the dealer will be on the hook for the cost of the stolen goods .

Not only is the limit important , but risk controls like identification verification software can prevent this type of theft from occurring .

EMPLOYMENT PRACTICE LIABILITY COVERAGE

Lastly , we discussed the importance of an often relatively inexpensive coverage , employment practice liability , which protects dealers in the event of any employment related lawsuit such as wrongful termination , sexual harassment , and more . “ This is an area where I see more claims than people with coverage ,” Materne shares . “ Smaller stores probably have better controls in place to safeguard against these concerns , but all it takes is one owner , or one employee that can cost you .” In today ’ s litigious society , it is important to understand the risks at play here and to take action to shift that liability to the insurance provider .

CONCLUSION As highlighted earlier in our article , powersports dealers are encouraged to review and revisit their commercial and personal insurance coverage to better protect their assets and overall net worth .

Our team offers a complimentary service , the Second Opinion Service , a 360−degree review of your dealership and personal financial situation , which includes a review of your wealth protection strategies .

Brad Stanek , CFP is an executive director and financial advisor with The Stanek-Haack Group at Morgan Stanley in Chicago . Email him at brad . stanek @ ms . com .

Paulina Matel , CFP is a financial advisor with The Stanek-Haack Group . Email her at paulina . matel @ ms . com .