When it comes to major purchases, getting insurance is key to protecting against unexpected risks and dangers. However, sometimes as a vendor, you have to take measures to confirm that your customers have the coverage you expect.
Let’s dive into insurance verification, including what it is, why it’s central to the auto and property industries, and how your business can implement it smoothly into your processes.
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Insurance Verification: What It Is and Why It Matters
Insurance verification is the process of vetting a customer’s coverage to ensure that it meets the necessary requirements. This typically comes up as the final step before closing a major deal, such as renting out an apartment or selling a car.
Whether you run a car dealership, manage rental properties, or oversee short-term auto rentals or loaners, you expect your customers to carry insurance to protect them and you from unexpected financial losses. In this stage, you’ll check the customer’s insurance policy to ensure that it’s active, accurate, and adequate.
Why proof isn’t good enough to protect your business
Many businesses accept proof of insurance in the form of a static document, such as a declaration page or insurance ID card. However, as official as these files may seem, they often don’t provide the confirmation you need.
When you take a screenshot or insurance card as acceptable proof, you still don’t have any insight into their current insurance status. For all you know, the customer could have canceled their policy the very next day. Better yet, the image itself could be forged.
Think about it this way – you wouldn’t conduct a credit check by looking at a screenshot of your customer’s credit score. You should think of insurance the same way.
So why check at all? Because without verification you could be putting your business at risk. The good news is that Modives makes insurance verification easy with CheckMy Driver for auto transactions and CheckMy Resident for property rentals, helping you protect your business without wasting time or money.
Insurance Verification for the Auto Industry
When conducting an auto transaction, making sure your customer has sufficient coverage is not only a smart business practice – it’s a legal requirement. Motor vehicle owners in every state are at minimum required to carry liability insurance policies. For that reason, dealerships who don’t check insurance during auto transactions may be subject to violations and potential fines.
At the same time, the traditional insurance verification process leaves several gaps through which insufficient policies may slip through. If you don’t have an airtight process in place to verify insurance, there’s a real chance that your customer’s policy falls short.
According to the Insurance Information Institute, nearly one in seven drivers are uninsured. This means that they do not meet the liability insurance coverage minimums required by law. Even more vehicle owners may be underinsured, or have policies that won’t provide adequate protection in case of an accident.
That’s why it’s important to conduct thorough insurance verification at key points in the process to protect your business from the risks posed by drivers without adequate insurance.
Solving the insurance problem at car dealerships
At most car dealerships, verifying the customer’s insurance is a necessary step before closing a deal. In nearly every state, someone needs to hold active, accurate, and adequate auto insurance before title can be transferred to them for a car purchase or lease.
Typically, this process starts with the car shopper providing a declaration page or insurance card. These documents often include key details such as:
- Policy number
- Policy period (effective date and expiration date)
- Names of insured drivers
- Vehicle description (year, make, model, vehicle identification number)
- Types of insurance coverage
- Coverage limits
- NAIC (National Association of Insurance Commissioners) number
After receiving proof of insurance documents, the dealership’s F&I office calls the insurance provider to verify the information. This step can take anywhere from 15 to 45 minutes, during which time the customer will be in the waiting room until the verification of insurance is complete. Studies find that this difference of 30 minutes can impact the customer’s NPS score by 19 points– reflecting a major influence on the overall dealership experience.
The current insurance verification process also opens dealerships to many compliance violations if not handled properly. For example, did you know that it’s an FTC violation to receive or store pictures of customer licenses as part of an auto transaction? And that dealerships could be fined $51,744 for each picture of a license?
We recently spoke with a sales representative at a dealership who showed us hundreds of photos of licenses on his phone that he said represented the dealership’s common verification process. That’s millions of dollars in violations if the FTC ever found out, and they’ve started to crack down thanks to a new rule defining car dealerships as financial institutions.
Those compliance issues are solved with CheckMy Driver by Modives, saving the dealership and customers time while also improving the sales experience.
Through its automated, customer-driven experience, CheckMy Driver verifies your customers’ policy is both active and adequate to your insurance requirements. By creating a process your customer can complete on their own without your intervention, you can save time and get them closed while reducing the wait for F&I, improving their satisfaction by an estimated 12 points according to the London School of Economics.
Improve your customers’ experience, protect your business from loss and compliance violations, and save time with CheckMy Driver.
Reducing risk for short-term auto rentals
We’ve all rented cars, and most of the time we skip that auto insurance policy offered by the rental company. Sometimes they ask if we have our own coverage, but most of the time they don’t actually verify it.
And what if it’s not there?
No one wants to slow down the rental process, especially if it’s just booking a truck for a few hours to move some things or grabbing a car to pick someone up from the airport.
CheckMy Driver for auto and short-term rentals makes that process easy, handling verification quickly through its automated, consumer-driven process even before the renter arrives to pick up the keys.
There’s also no need to worry about their coverages changing between booking the reservation, grabbing the keys, and returning the car. CheckMy Driver can automatically monitor their insurance, notifying you and them of any changes to the policy, helping cover the gap with mitigation options.
From end to end, CheckMy Driver makes insurance verification and monitoring easy for auto-rentals, providing the transparency you need with its automated and innovative solution.
Insurance Verification and Monitoring for Rental Properties
Most rental properties require that residents hold renters insurance in order to secure a lease. This requirement, often listed as a clause in the lease, typically mandates liability coverage and provides a recommendation for personal property. Similar to auto dealerships, many leasing offices enforce this by requesting copies of insurance documents before the move-in date.
However, how many actually check with the insurance company to verify that insurance is active and adequate? And what happens if it’s canceled or altered the day after move-in?
Even if you verify coverage is active and adequate with your resident’s or applicant’s insurer— a rarity based on the conversations we’ve had with property management and owner-landlords— there’s the very real risk your tenant will be among the 45% of renters who cancel their insurance coverage during the term of their lease.
CheckMy Resident gives you the transparency you need into their coverage to protect your business and have peace of mind.
During the application process, or as an audit for your current residents, CheckMy Resident verifies your tenant’s renters insurance policy with their insurance carrier to certify that it is both active and adequate. But what good is their coverage if it’s canceled or altered the next day?
CheckMy Resident also automates monitoring, pulling information directly from the insurance company on a regular basis. This ongoing process gives you visibility into any alterations and provides your residents with embedded insurance shopping and mitigation options if their coverage is changed.
How Modives’ Solutions Stack Up Against Traditional Insurance Verification Processes
Traditional Insurance Verification:
- Often relies on proof, not verification—accepting insurance identification cards, declaration pages, and other evidence that could be outdated, inaccurate, or fraudulent
- Requires technical resources to implement API access where available to connect with carriers
- One-time pulls to prove that insurance is active, with no attention or checks as to whether it’s also adequate
- Adds time to your process, slowing things down and creating an inferior customer experience
- If insurance is missing, no options to fix your issue
Insurance Verification Through CheckMy Driver or CheckMy Resident:
- Carrier-certified verification, with real-time coverages available through our reporting dashboard
- No technical resources necessary, you can be up and running in minutes with your first verification
- Monitoring available to keep an eye on their policies, notifying you and them if any changes to coverages occur
- Improving the customer experience and saving you time by automating the verification process, taking less than two minutes of their time and only a few clicks from you
- Embedded insurance and risk mitigation options to provide coverage in the event theirs doesn’t meet your needs
Reach out today to learn more about insurance verification for property rentals through CheckMy Resident or auto transactions through CheckMy Driver.