EF1 Tornado damages 200 cars at Indianapolis Auto Auction … Is there coverage?
It has been widely reported that an EF1 Tornado touched down in Indiana yesterday. EF1 tornados generally have sustained winds between 86-110 mph which can make a significant impact on local homes and businesses. http://en.wikipedia.org/wiki/Enhanced_Fujita_Scale
The tornado that touched down in Plainsfield, IN reportedly damaged 200+ cars at an Adesa Auto Auction (Indianapolis). http://www.wthr.com/story/25858334/2014/06/24/storms-prompt-severe-weather-warnings-in-central-indiana This begs the question, what type of coverage does the auction have for these vehicles? And what will the lenders expect?
From the National Weather Service: http://www.nws.noaa.gov/view/prodsByState.php?state=in&prodtype=public
As a repossessor your clients (especially forwarders looking to eliminate their client’s potential losses by passing liability on to you) may demand payoff because of the contracts you have signed. If providing coverage at all, carriers do not pay payoff. Actual Cash Value or “ACV” is the valuation method used to determine how much the carrier will pay. But many of you are signing contracts everyday that say you will be responsible for any and all losses sustained by your client and their clients, affiliates, etc.
Will lenders and forwarders demand the same of the auction? And if not, then why should you be responsible if they don’t expect the same from everyone?
Legal Liability policies that are generally cheaper than Direct Primary policies will not offer coverage if the insured did everything they were legally required to do in order to prevent the loss. And in cases of Acts of God i.e. storm/weather related losses, many times there is nothing that can be done to prevent the loss.
Also, if an insured’s location is in an area prone to storms, carriers will specifically exclude storm coverage, even on Direct Primary policies, in order to avoid paying the losses that simply are matter of time, statistically speaking. Lenders often have insurance policies that will pay for these catastrophic losses, but their loss runs tend to look a lot better if someone else’s coverage pays for the loss.
It is extremely important that you understand what coverage your policy offers and the content of the contracts you are signing. The RSIG Master policy has coverage for storm related losses and does not restrict that coverage based on an insured’s location. RSIG has also informed and warned its members and the industry about the dangers of these contracts; and this serves as another reminder of the damage Mother Nature can cause.