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A study by the Insurance Research Council (IRC) revealed that over a third of drivers in the United States are either uninsured or underinsured. This lack of insurance carries serious implications for dealerships and car rental companies.
Allowing customers to take courtesy vehicles or rental cars without proper insurance poses a significant risk. Automotive businesses are typically responsible for the cost of any accident, ranging from minor dents to major collisions, and are often required to spend considerable time managing complex investigations. These incidents can result in substantial claims; in one notable case, a dealership was required to pay $850,000 after loaning a vehicle to a customer who had canceled their insurance before taking possession of the car.
The emergence of insurance verification offers a promising solution: a streamlined and effective way to confirm that a customer has active coverage. Axle, one of TSD’s partners and a leading provider of insurance verification, helps mitigate risk by offering instant access to verified insurance data. Here are some insights on how this technology is transforming risk management in the automotive industry.
Three Key Takeaways:
- Dealerships and Rental Car Companies Often Underestimate Insurance-Related Losses
Even seemingly minor damage can lead to significant costs. Axle estimates that for every 100 vehicles in a fleet, businesses face approximately $82,000 in unrecovered losses annually. Verifying insurance is a simple yet highly effective way to reduce these costs. - Insurance Verification Can Increase Recovery by Up to 35 Percent
There are many reasons an insurance claim might be denied, ranging from expired or fraudulent insurance cards to missing or incomplete customer information. More complex issues, such as a lack of comprehensive or collision coverage, excluded drivers, or insufficient rental coverage, can also prevent recovery. Insurance verification helps prevent these scenarios by ensuring accurate and up-to-date policy information. - Fleet Insurance Policies Have Their Limits
While many dealerships and rental companies maintain secondary fleet insurance policies, the cost of these policies is rising significantly, by as much as 10 percent annually. Also, insurance carriers are increasingly dropping clients with excessive claims. As fleet insurance becomes more expensive and harder to secure, insurance verification stands out as a practical measure to help contain costs and reduce risk.
At TSD, the team works closely with dealerships and rental companies every day. Among TSD’s 16,000 customers, insurance issues are a consistent concern. TSD and Axle have partnered to develop insurance verification programs tailored to the unique risk profiles of some of the largest dealership groups and car rental operators in the industry. Learn more about the insurance verification program before you have another claim.
