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Under reporting - Money Saver or Suicide?
I hope he has the right coverage and a sharp agent

A dealer told me that he was reporting a certain amount of inventory with his agent that was much lower than his actual inventory amount. He thought that he was saving money by paying for less inventory. Whoa! This is no place to cut corners. The problem with this is called "Co-insurance." Co-insurance states that if inventory is underreported by more than ten percent, when a claim is submitted the claim will be paid minus the percentage that was underreported.


Actual Inventory Amount $200,000
Reported Inventory Amount $100,000
Under reported (Co-insured) 50%
Claim $10,000
Coinsurance at 50% $5,000
Due on Claim $5,000
Deductible $1,000
To be paid on Claim (NET)$4,000
This is no place to fool around.

"The Tow Company has insurance, so I'm OK, right?"

Maybe. Tow companies, auto transport companies, mechanics, body shops and detail shops are usually insured. If the company that has your vehicle in their "care, custody and control" has Garage Keepers coverage you should be fine in the event of a loss. There are factors that can get in the way. Underinsurance due to low coverage limits or catastrophic loss, non-payment of insurance premium (temporary lack of coverage at the time of loss.) Loss due to a condition not covered. Dealers Open lot/Inventory coverage usually takes secondary liability in these situations. If their insurance company isn't covering you, your dealer insurance company usually is. This should always be clarified with your agent.

Is there information here that your agent didn't tell you?

Did it cost you money?

We hope not.

Written by:
Dave Hoffman - Broker / Owner

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