Insurance Verification Saves Car Dealerships from Big Risks

People In Car Dealership

According to data from the Insurance Information Institute, nearly 13% of drivers—or one in eight—is uninsured. But that crucial data point might not come to light until it’s too late to protect your auto dealership or service department.

To help protect your business, make sure you’re verifying that your customers’ insurance is active and adequate before you had them the keys to test drive, pull their new auto off the lot, or take your service loaner for a spin.

How Missing Insurance in the Car Sales Process Can Cost Dealerships

Gabe hadn’t been driving much over the past few years while he was living in the city, but now that he’s moving out to the suburbs for his new job, he needs to buy a car. While he’s looking around to see what he wants, he doesn’t want to pay for car insurance, instead just flashing his old insurance card from when he was covered under his parents’ policy during college.

Each dealership Gabe visits has no problem making copies of his driver’s license and the old insurance card, and Gabe loves test driving all these new cars.

Until one rainy day, when Gabe take a high-end electric vehicle out for a spin. He misses the car merging into his lane, swerving out of the way at the last minute and injuring a pedestrian in a crosswalk before smashing into a pole.

Luckily Gabe was only driving at low speed, so both he and the pedestrian walked away with only minor injuries. But since he wasn’t covered under an auto policy, the dealership could be on the hook for damage to the expensive vehicle and injuries to the pedestrian—bills that could really rack up!

That’s the risk auto dealerships run when they don’t verify with carriers that a driver’s insurance is both active and adequate. An insurance card, deck page, or other proof of insurance isn’t good enough—you need insurance verification you can trust before you hand over the keys.

What Is Insurance Verification?

Insurance verification for auto dealerships is the process of checking that a test driver’s, buyer’s, or service customer’s auto insurance is both active and adequate. This process is conducted by reaching out to the consumer’s auto insurer, which can be time-consuming and aggravating for those at the auto dealership or in its service department.

Typically, someone from the auto dealership’s finance and insurance office manually calls the consumer’s insurance carrier, often waiting on hold for at least 15 minutes to talk with someone in the insurer’s call center—and that’s assuming someone picks up on the first call.

CheckMy Driver, Modives’ solution for auto dealerships and their service departments, offers a consumer-driven and intuitive insurance verification process to consumers in a fraction of the current wait time through its automation.

Where Today’s Process Falls Apart

There are many different flavors of how car dealerships gather proof of insurance for their customers, but many only do so at the point of purchase rather than any of the other vital steps in the process.

For example, the dealership in the hypothetical above would benefit from verifying insurance before letting shoppers take their autos out on a test drive. The same could be said of service departments handing out loaners without verifying insurance with the customer’s carrier.

Many dealerships have shared stories similar to the following: Mia brings in her ten-year-old car for repairs and is handed the keys to a loaner after the service representative takes a cursory glance at the screenshot of an insurance card on her phone.

However, Mia’s coverage is below the state minimums, which in her state are low compared to the national averages. Her teenage son takes the loaner out for a joy ride and ends up totaling it, with the cost to repair far exceeding Mia’s coverage and the value of her old, broken car combined.

The dealership’s only choice is to eat the cost of the totaled loaner, with the busted old car sitting on a corner of the lot for years after.

What Car Dealerships Should Consider for Insurance Verification

There are several steps car dealerships and service departments can take to make the insurance verification process easier and still provide better protection for their business than today’s systems:

  • Proof ≠ Insurance: Dealerships and service departments can’t depend on their customers’ ID cards, declaration pages, or other “proof” of insurance to cover business risks during the sales and service processes. Make sure the insurance is verified to be both active and adequate through the customer’s insurance carrier.
  • Verify Before It’s Too Late: Don’t wait until the last minute to verify that insurance is active and adequate with the customer’s carrier, because you could hit a snag that kicks your deal—or at least delays it. Instead, check early in the process as the sale progresses to line everything up for later success.
  • Monitor to Avoid Surprises: It’s incredibly easy for your customer to cancel his or her insurance the day after you check that it’s active and adequate in order to save a couple bucks. If they’re going to be holding onto your loaner or test drive for an extended period of time, make sure that you’re verifying that the insurance remains active and adequate throughout that period to get the transparency you need to keep your business safe.

While those steps may seem difficult and time consuming, the good news is that CheckMy Driver makes insurance verification and monitoring easy.

Through CheckMy Driver’s automated and consumer-driven process, dealerships and service departments can cut down on hours of frustrating work while still getting vital visibility into their customers’ insurance coverage.

Learn more about CheckMy Driver or sign up today!

Criminal Report

Criminal records coverage may vary due to (1) jurisdictions limiting what records are eligible to return and (2) TransUnion limiting records that do not meet its data quality standards. As of the Rev. Date, criminal records are available to return in:

Alaska, Arkansas, Arizona, California, Colorado, Connecticut, Florida, Georgia, Illinois, Indiana, Kansas, Kentucky, Louisiana, Minnesota, Mississippi, Nevada, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Tennessee, Texas, Utah, Virginia, Washington and West Virginia.

Rev. Date 01/10/24