Wharton Insurance Briefs

This article is similar to articles written in the past which discussed Dealer Physical Damage coverage. I feel it is very important for you to understand this coverage. It is sometimes referred to as Dealer “Plate” Physical Damage or Dealer “Open Lot” coverage; however, the name of the actual coverage is Dealer Physical Damage. This provides for physical damage (collision and comprehensive) that occurs to vehicles that you have for sale (on your lot or when using a dealer plate). The coverage can be on a “Reporting” or “NonReporting” basis. One of our companies advised that they are going to be addressing the claims for this coverage as outlined in the policy. Each company’s policy wording may differ, but the end results are similar.

The most important thing to know is the coverage limit on your policy must match the “total value” of all your vehicles held for sale, including vehicles with a dealer plate. For example, if you have 10 cars for sale (valued at $30,000) and another three cars with dealer plates (valued at $30,000), you need to have $60,000 of coverage listed on your policy. At the time of a loss, the company will take the total value of all your vehicles for sale (schedule of inventory plus dealer plated vehicles) to see if it matches the amount of coverage on the policy. If the limit on the policy is less, they will divide the limit of coverage on your policy by the total limit of your scheduled inventory (including dealer plated vehicles) and pay that percentage of the claim. For example, if you have a Dealer Physical Damage claim of $10,000 and your policy limit is $25,000, but your total value of all the cars for sale (plus dealer plated cars) is $50,000, the company will divide the $25,000 by $50,000 and pay 50 percent of the $10,000 claim.

Please make sure that your inventory matches the limit of insurance on your policy, and call your agent with any adjustments as soon as possible. If you have any questions, give me a call.

Mario DeFilippis AAI Vice President Wharton Insurance Group

800-221-0003 (ext. 1320) (908) 513-8588 (cell) mdefilippis@whartoninsurance.com