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Newsletter 2014

Under reporting - Money saver or suicide?

A dealer told me that he was reporting a certain amount of inventory with his agent that was much lower than his actual inventory amount. He thought that he was saving money by paying for less inventory. Whoa! This is no place to cut corners. The problem with this is called "Co-insurance." Co-insurance states that if inventory is underreported by more than ten percent, when a claim is submitted the claim will be paid minus the percentage that was underreported.

 

Example:
10% Underinsured - Insurance Company pays 90% of loss
20% Underinsured - Insurance Company pays 80% of loss
30% Underinsured - Insurance Company pays 70% of loss
40% Underinsured - Insurance Company pays 60% of loss

Etcetera

Minus the deductible

This is no place to fool around.
Truck Stuck in the mud

I hope he had the right coverage and a sharp agent


"Will adding my spouse to my dealer policy save me money?"

In most cases YES, If you qualify. If you are not incorporated, not leasing your personal vehicles and do not have children living at home between the ages of fifteen and twenty-one: this usually saves dealers a lot of money. For dealers that own their personal vehicles outright: the dealer adds the spouse to the policy and raises the inventory coverage to include the value of the personal vehicles. This is almost always a huge savings compared to keeping the personal policy. For dealers that are financing their personal vehicles: the vehicles are added to the policy as "Scheduled Vehicles" and evidence of insurance is sent to the finance company. In most cases, the additional premium to add the vehicles is approximately half of what the dealer is paying for his personal insurance policy.

"The Tow Company has insurance, so I'm OK, right?"

Maybe. Tow companies, auto transport companies, mechanics, body shops and detail shops are usually insured. If the company that has your vehicle in their "care, custody and control" has Garage Keepers coverage you should be fine in the event of a loss. There are factors that can get in the way. Underinsurance due to low coverage limits or catastrophic loss, non-payment of insurance premium (temporary lack of coverage at the time of loss.) Loss due to a condition not covered. Dealers Open lot/Inventory coverage usually takes secondary liability in these situations. If their insurance company isn't covering you, your dealer insurance company usually is. This should always be clarified with your agent.


Is there information here that your agent didn't tell you?      Did it cost you money?      We hope not.

 

Written by: Dave Hoffman
Broker/Owner