Inclimate Weather Can Hit Car Dealerships Hard
Inclimate weather can destroy a dealership’s inventory.
You have may heard about the recent floods in New Jersey. There was a flash flood, sending 42 vehicles down the Peckman River. This also happened in July of 2017 in Chicago when flooding reached over 100 vehicles and caused $5M in damages at Ford Lincoln Dealership.
Hail damaged hundreds of vehicles in Alabama that could very well exceed $4M in damages.
During a recent five-year stretch, insurance claims related to wind and hail damage on a national basis in general accounted for almost 40 percent of all insured losses, averaging approximately $15 billion annually and growing each year, according to the Rocky Mountain Insurance Information Association.
Dealerships can reduce risk through Dealer’s Open Lot Insurance, which includes comprehensive and collision coverage but also provides physical damage protection to a dealer’s vehicles and equipment. Coverage applies to all types of vehicles including cars, trucks, campers, motorcycles and farm equipment. This policy covers those vehicles while they are:
- Being driven to or from auction;
- Parked on the dealer lot as inventory;
- Housed inside the dealer’s service area or showroom; and
- Test-driven or driven for personal use by an owner or employee.
In addition to weather-related incidents, Dealer’s Open Lot Insurance covers vandalism, which can range from a smashed window to vehicle theft.
Dealer’s Open Lot: It’s a necessity
Dealers have little choice but to purchase Dealer’s Open Lot Insurance because, in most cases, they do not own the vehicles.
The weather is just downright unpredictable!
A major hailstorm or a flood along a coastal region could wipe out an entire lot of vehicles. “A single storm event, such as a major hailstorm or a flood along a coastal region, could result in damages in the millions of dollars,” said Eric Ellis, Property Claim Supervisor, Minuteman Adjusters.
In 2016, there were 5,601 major hailstorms nationwide, according to the National Oceanic and Atmospheric Administration’s database. In 2013-2015, Texas had the most hail loss claims with 394,572, according to a National Insurance Crime Bureau report. Colorado was second with 182,591. The top 10 states represented 66 percent of the total number of hail claims during this time frame.
The largest insured loss event of 2014 was caused by a spate of severe storms with hail from Colorado to Pennsylvania across five days in May, causing insured losses of $2.9 billion.
“Geographical location is the largest determination for the cost of any of these policies,” Kadlic said. “Any underwriter today will want to see a minimum of five years of losses to price a policy. But some of the dealers we’ve worked with have seen their rates increase even without significant claims in the last 10 years, so it really varies.”
Have a great day!
The Davis Insurance Agency (an Affordable American Insurance company) in Wheat Ridge, CO offers auto, car, home, house, fire, workmen’s compensation, antique car, classic car, commercial, business, life, motorcycle, renters, ATV and RV insurance. Call us today for a free quote at (303) 233-1535