In the auto insurance world, the focus is rightfully put on the car buyer obtaining coverage to keep their new or new-to-them vehicle safe. But another portion of auto-related insurance that needs to be stressed is the important role that garage insurance plays in covering losses and incidents that can take place on sales lots.
This is where a valued insurance agent steps in to provide the right knowledge about how garage policies work and related products that can add layers of safety. Unfortunately, most auto dealers haven’t heard of false pretense coverage, one of those added layers of protection that can keep them protected.
What is False Pretense Coverage?
False pretense coverage for dealers is an endorsement that they, the dealer, can add to their already-in-place garage policy. It alters the coverage in the physical damage section of their policy and gives the dealer two types of protections including unscrupulous sellers and unscrupulous buyers.
Buyers and Sellers
When auto dealers are looking to take in a trade or even buy a car someone brings in to sell for credit or cash back, there needs to be a thorough vetting that that seller actually owns the car they’re bringing in. If not, this could mean a world of trouble for the auto dealer if they take the car only to find out it was stolen, for example, beforehand.
False pretense protection adds loss for a covered auto a dealer now owns, and that which was dishonestly sold to them. If a dealer purchases a car with a fraudulent title, they will take on a massive loss. The actual owner can trace the car back to a dealer and demand it be given back or take legal action against the auto dealer.
On the other side of the coin, if someone comes in looking to purchase a vehicle under false pretenses, the auto dealer can also take on a huge loss. More often than not, when this happens, the person who took the car under a scheme is nowhere to be found, leaving an auto dealer hung out to dry.
While time is money in the auto sales world, there needs to be diligent steps taken when selling a car to any customer. In the event that an auto lot is taken advantage of, however, it’s good to know there is coverage, such as false pretense coverage, that can protect against losses that are obtained due to nefarious individuals.