This is the first on a three part series on what you as a Dealer/GM/Sales manager/F&I manager/Salesperson should know about handling your customer’s car insurance after the sale.
1. How long is a customer covered until insurance is transferred to the new car they bought?
The customer has coverage for 30 days from the purchase and delivery of the new car. The coverage will be the best available on the policy. For example the customer has an older car with just liability and a newer car with full coverage, if they buy a new car (trade or not doesn’t matter) the full coverage will carry with them for the 30 days. However if they only have liability only, liability only will carry on to the new car if it is not changed to full coverage. After the 30 day period coverage will most likely cease for the new vehicle if the insurance transfer has not been made.
2. What happens if the insurance agent/carrier is not notified and there is an accident (claim)?
If over the 30 days ‘automatically insured’ date, the insurance carrier may deny the claim. A denied claim could easily put the party suffering the loss in a situation to bring lawsuit to others. Regardless of what the dealership’s role was in this process, they may be named in a liability lawsuit.
3. What information does the insurance agent/carrier need?
They will need the complete VIN(vehicle identification number), lienholder information if applicable, if a vehicle was traded, and the date the sale is completed (legal transfer date or delivered date) Occasionally they will need mileage as well. As a note legal transfer date means when the car is taken into possession by the new owner, not just the date the paperwork was completed, this is important because coverage of the new car starts on that date.
4. Who is responsible for transferring/notifying the insurance agent/carrier?
Ultimately the policy holder is responsible for the transfer. However this is a place where dealership due diligence is extremely important. If your salesperson or F&I person tells the customer that they will personally handle this they better make sure to do it. As a former F&I guy I always used insurance coverage forms and explained to the customer that they will be responsible for contacting their insurance agent/carrier to place the proper insurance on the new vehicle. I then made a note and followed up within the next few days after the sale to make sure it was done, you would be surprised how many customers neglect to contact their insurance agent/carrier even after being informed that they needed to. It is better to be safe than sorry. No one likes to handle the phone call with an angry customer who has had some kind of accident only to find out that the dealership didn’t call the insurance agent/carrier and their claim is not going to be covered.
This information is more specific to car dealers in North Carolina but the information is still good to know. Contact your local insurance agent to get the full scoop if you are outside of North Carolina. If you have questions I don’t answer in this series please contact me so I can get you the information you need.
Ryan Stefl – Insurance Service of Asheville - firstname.lastname@example.org