California Auto Dealer Insurance FAQ (updated for 2018!)

After working in the California Used Car Dealer Insurance space for 20+ years, I gained supreme insights that I’ll share here with my auto dealer friends across the country. YCDB is giving back by giving by providing this Dealer Insurance FAQ for you.

 

Auto Dealer Insurance FAQ

Auto Dealer Tip of the month for July 2018.

Be careful if you are selling service contracts (also known as extended warranties) because the potential upside may be more than offset if things go array. Over the past 15+ years, service contracts providers of all sizes have had issues staying in business. There are also a fair amount of these service contract companies that have been formed in Turks and Caicos and other off-shore outlets that have less oversight.

 

Auto Dealer Insurance FAQ (2018 edition)

Used Car Dealer Question: Do I need dealer insurance to get or keep my California DMV dealer license? Does it matter if I’m not a retail auto dealer?

YCDB’s Answer: The California DMV insurance does not require proof of insurance to get or keep your used car dealer license. Although this seems crazy, it’s absolutely correct.

 

Used Car Dealer Question: How could do any of these issues affect a dealer that sells extended warranties on the vehicles that they sell?

YCDB’s Answer: Garage insurance is necessary for businesses that are selling, repairing, servicing, storing, parking, or attending automobiles.

 

Used Car Dealer Question: What businesses need some form of garage insurance?

YCDB’s Answer: Garage insurance is necessary for businesses that are selling, repairing, servicing, storing, parking, or attending automobiles.

 

Experts in Increasing Dealer ROI

 

Auto Dealer Insurance FAQ (answers for advanced dealers)!

Car Dealer Question: What does symbol 21 mean?
YCDB’s Answer: Any auto. Don’t be confused on this definition. Quite a few Dealer Insurance Policies over the years have written their Liability Coverage on a Symbol 21 basis. This is true over a 15-year span, standard or non-standard insurance programs, whether the insurance contracts were written on proprietary or ISO forms *, by admitted or non-admitted insurance carriers.

The trick here is diving into the Insuring Agreement and the Exclusion sections that are applicable to this coverage. These sections will isolate scenarios in which the carrier is trying to either limit or eliminate coverage altogether. Be mindful of the language in these sections of your insurance contract which is sent to you annually with your Declarations Page(s).

An insider tip for my car dealer friends out there here is to ask your insurance agent to get you a copy of that insurance contract in electronic format. Most carriers will print the contracts in a super small font which makes finding details and important language more difficult for the consumer. 

* ISO Forms are the insurance industry standard regardless if you are an insurance carrier that sells home-owner insurance or Car Dealer Insurance. ISO is a subscription-based service that insurance companies use to offer their insurance contracts on and then they add some slight tweaks based on their experience and risk tolerance.

 

Car Dealer Question: Why does my dealership policy need an aggregate limit on the dealers physical damage collision deductible?
YCDB’s Answer: In rare instances collision losses effect more than one dealership vehicle at the same time.
i.e. – Let’s say a motorist loses control of their vehicle in front of your dealership and collides with three or four dealership vehicles. With the aggregate deductible in place, it limits the amount a dealer pays in out of pocket deductible expenses for the loss.”

 

Car Dealer Question: How can I limit my risk exposures?

YCDB’s Answer: We assist each of our insured’s with a loss control survey in order to minimize or remove risk exposures.

 


If you got something out of this insurance page, you will love the California Used Car Dealer Insurance Buyer’s Guide. Here’s a link to that dynamic content that Mike Ramos wrote a few couple month ago so the information is super relevant for auto dealers in 2018!


YCDB Quicktip here to really keep up on your vendor partnerships.

Here’s a company that had recently sold tons of extended service contracts through California used car dealers and now they don’t even have an active insurance license. Check it out for yourself and believe me the California Department doesn’t lie.

 

The source of this data regarding INTERSTATE NATIONAL DEALER SERVICES, INC. dba WARRANTY DIRECT INSURANCE SERVICES is the California Department of Insurance. Click here to check the Department’s website for yourself.

Name: INTERSTATE NATIONAL DEALER SERVICES, INC. License#: 0C36822
DBA: WARRANTY DIRECT INSURANCE SERVICES
License type: Casualty Broker-Agent Status: Inactive Status Date: 05/02/2018 Exp Date: 05/02/2018
License type: Property Broker-Agent Status: Inactive Status Date: 05/02/2018 Exp Date: 05/02/2018
License type: Vehicle Service Contract Prv Status: Inactive Status Date: 05/02/2018 Exp Date: 05/02/2018
Business Address: 6120 POWERS FERRY RD. NW SUITE 200 ATLANTA, GA 30339
Number of 2016 Justified Complaints with the Department: 1

Bond Information
Bond Amount: $10,000 Bond #: FX – 74 S 103075261 BCM
Surety Co: 31194 – TRAVELERS CASUALTY AND SURETY COMPANY OF AMERICA

Enforcement Action Description
Enforcement Action: ORD: ORDER ID: < VSC 000024 >BP CEASE AND DESIST. On Date: 02/22/2002
Enforcement Action: ORD: ORDER ID: A LICENSE AND LICENSING RIGHTS OF RESPONDENT ARE HEREBY REVOKED. On Date: 05/02/2018
Enforcement Action: ORD: ORDER ID: AP ORD: ORDER ID: AP ORDER FOR ISSUANCE OF RESTRICTED LICENSE AND MONETARY REIMBURSEMENT. On Date: 07/15/2004
Enforcement Action: ORD: ORDER ID:< VSC 000024> AP LICENSES AND LICENSING RIGHTS OF RESPONDENT ARE HEREBY REVOKED. ISSUE IN LIEU THEREOF A RESTRICTED LICENSE. MONETARY PENALTY IN THE AMOUNT OF TWENTY THOUSAND (20,000) DOLLARS TO BE PAID JOINTLY AND SEVERLY WITH OTHER RESPONDENTS. On Date: 06/27/2001

Records 1 to 15

 


Check out the Your Car Dealer Podcast.

Now available on the iTunes Store and Stitcher Radio.

 


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Amazon does. Please hit this link if you need anything from the Amazon Store:

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Once you click on the link, bookmark that webpage into your “Favorites”. That’s it, then just order from that link when you need anything from the Amazon Store. You will never be charged a penny more for your purchases and the good folks at Amazon will provide support to Your Car Dealer Bond. Now that’s a win-win situation if I ever heard one!


What Is a Service Contract?

A service contract is defined by the National Association of Insurance Commissioner’s Service Contracts Model Act (a model act is a proposed statute for each state’s legislature to consider for adoption) as “a contract or agreement for a separately stated consideration or for a specific duration to perform the repair, replacement, or maintenance of property for the operational or structural failure of any motor vehicle, residential or other property due to a defect in materials, workmanship, or normal wear and tear.”

Said another way, a service contract provides coverage to a consumer when a covered product (e.g., an automobile, television, or refrigerator) fails to perform as originally intended. For example, an automobile may break down, wear out, or simply stop functioning due to a defective part. While there may be other coverage terms, conditions, and limitations that may apply, at its core, this is the basic concept of a service contract.

Service contracts are frequently referred to as “extended warranties” because they can extend the manufacturer’s warranty for a specified period of time. One of the key differences between a warranty (provided by the manufacturer, retailer, or other entity in the product’s chain of distribution) and service contract is that a consumer must pay an additional sum of money for the service contract instead of having the cost be included in the purchase price of the covered product.

 

The source of this fantastic detail above regarding Extended Service Contracts are the good folks at IRMI. Check the full link if you have a few minutes if you would like more details on the inner workings of the Extended Service Contracts.

https://www.irmi.com/articles/expert-commentary/auto-service-contract

They even have a well-written section on the differences between service contracts and traditional insurance, which is a super common question amongst car dealers regardless of industry experience.


The YCDB Quicktips Series can turn your dealership around. Read our Auto Dealer Insurance FAQ section today!

 

This “insider info” could not be gained by working for an insurance agency for 20 years! My experience is working for an A-Rated nationwide insurance carrier.


YCDB Headquarters:


Your Car Dealer Bond is here to help in any way we can from offering you super low rates on your $10,000 or $50,000 surety bond. We can also help you develop your dealer brand by creating you a stunning logo or professional business cards for your dealership.

YCDB is also offering quality copywriting services for our car dealer friends. If English is not your first language, you don’t like writing your website content, or you simply don’t have the time. Give YCDB the chance to earn your business right now. We have super reasonable rates and I have been writing for mom and pop dealers and $300,000,000 insurance carriers for more than 22 years. Heck I even used to write telemarketing scripts in my prior life back when Glenn Ivy was blowing up!

Give us a shout today and let us help you out. 866-357-4405 and ask for Mike Ramos or click this link to be escorted to our contact us page.


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