There are many different types of insurance that auto dealerships must have in order to protect themselves and their inventory. False pretense coverage, which is sometimes bundled with a general liability insurance package, but is usually optional, is one of them. This type of insurance provides protection from a number of different situations, all of which involve consumers trying to buy a vehicle under less than legal means. Here are some of the situations where having false pretense coverage can prevent your dealership from suffering monetary losses.
Identity Theft from a Purchaser
For the most part, people are honest when purchasing a car. They provide proper pay stubs, show their driver’s licenses, and don’t misrepresent themselves as someone else. They walk out of your dealership with a new or used car having taken out a loan on their own credit worthiness. The problem lies with those who try to buy a car using stolen identification and the wrong social security numbers. By the time that you realize your sales manager has fallen for their scheme, these buyers are already off the lot with their new car.
Title Issues with Traded-In Vehicles
Trading in a car with a bad or falsified title is another reason why your dealership needs false pretense coverage. Your salespeople may take the word of the buyer and accept that they can trade in their existing vehicle for a newer one without checking the title itself. What happens when you discover that the title is fake or that the buyer didn’t even properly own the car that they traded in? You could end up taking the loss if it weren’t for your insurance policy.
Accepting a Bad Check from a Customer
Although it’s easy to check the viability of a down payment or full payment check when the bank’s open, what happens when it’s not? Dealerships that are open on Saturday evenings or bank holidays can end up accidentally taking a bad check. Getting a hold of the customer once they’ve left the lot with their new-to-them vehicle can be tricky, especially if they know that they passed a bad check. On top of alerting the authorities, you can use your false pretense coverage in order to help with the monetary damage.
Having a Test Drive Vehicle go AWOL
Sometimes customers test drive vehicles with bad intentions. While many will carefully drive the car around the block a few times before returning it to the dealerships, a few bad apples may try to abscond with the car. Some solutions for this include going on a drive with a salesperson in two and having false pretense coverage that will help pay for the loss of inventory should the test driver not return.
Have Questions? Contact Charlotte Insurance
Want to learn more about false pretense coverage for your dealership? Contact Charlotte Insurance. Our agents can explore and explain all available options and put together the insurance coverage plan your dealership needs.