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You Auto Know!® - Insurance Coverage

in Automotive/Transportation, News

Recently I received an e-mail from a colleague of mine in the southeast. The scenario is as follows: Dealer sells and delivers a new Jeep. It is a cash deal. “Customer” pays with a check, the funds are not verified and a new title clerk immediately titles the vehicle. Shortly thereafter, the same customer visits another Jeep dealership, obtains the keys to a similar Jeep and somehow swaps the Jeep’s UConnect trackers. The “customer” returns the second Jeep and the other dealer sells the second vehicle. Obviously the selling dealer finds out the check is NSF. The dealer attempts to track the Jeep he sold, gets a court order for possession and when they go out to grab the vehicle they find out it’s the wrong vehicle since the UConnects have been swapped. Subsequently, dealer runs a Carfax and learns the Jeep he “sold” had been re-sold by the “customer” to an out-of-state dealer who is claiming that he is a bona fide purchaser and refuses to return the vehicle. When the dealer turns the matter over to his insurance company, the insurance company’s position is that it is not their policy to cover any loss due to an NSF check.

First, I think there were several mistakes made by the dealership in the transaction, the first of which was not verifying the funds before releasing the vehicle and the second was titling the vehicle without verification of receipt of the funds. Regardless, this author believes that the dealer has a strong argument against his insurance company’s position and it should cover the loss. I am not rendering a legal opinion since I have not reviewed any insurance policies or other documentation, but the loss may be covered under the “theft” or “theft by deception” clauses. The loss did not occur due to the NSF check, it appears the loss was a scheme to steal the vehicle by providing an NSF check and by swapping the UConnect on the vehicle. After talking to the authorities, it was discovered that this was the second such theft by this buyer or group.

Many dealers take their insurance coverages for granted relying solely on their agent and their agent’s alleged understanding of the business. It is imperative that you or someone at the store meet with your insurance agent on a yearly basis to review your policies and make sure everyone is up to date with all the current issues. For example, in this day and age, it is not unreasonable to see if there is a policy coverage for cyber theft and/or business interruption due to cyber-attacks. People who do bad things are becoming more and more sophisticated and your insurance coverage has to remain up to date.

Contact Information

Robert A. Poklar, Esq.

Weston Hurd LLP

p: 216.687.3243f: 216.621.8369


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