Repossession Insurance Minnesota Policy Information
Repossession Insurance Minnesota. A century ago, cars were new, exotic, and considered a luxury. As times have changed, however, automobiles have practically become a necessity in many localities. Even though vehicles have become more accessible to greater numbers of people in recent times, there is no doubt that cars remain a serious investment - and many buyers rely on car loans to fund the purchase of a vehicle.
Automobile repossession companies are hired by banks and other financial institutions to recover vehicles when borrowers are delinquent in making payments.
Some lenders require the vehicles they finance to have electronic disabling devices that keep the vehicle from starting once a payment is late. Others install GPS devices to aid in location should the need for repossession arise.
The lender has the right to claim the vehicle at any place and at any time without providing any notice to the borrower but must do so based on the laws of the state where it operates. In some states, the payment can be as little as one day late to warrant repossessing the vehicle.
Any personal items in the vehicle at the time it is recovered must be set aside, secured, and returned to its owner. Recovered vehicles may be stored in a garage or an open lot outside the building. The recovery company may sell the vehicle on behalf of its lender client.
When buyers default on those car loans, automobile repossession companies - also often called "repo companies" - have the responsibility of recovering the property that, ultimately, still belongs to the lender.
While these companies can certainly expect to be kept busy, the fact remains that automobile repossession companies also face a range of risks, each of which could jeopardize their financial future. What types of repossession insurance Minnesota might repo companies need to carry to protect themselves?
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Why Do Minnesota Repossession Companies Need Insurance?
Each business, regardless of its branch of commerce, faces a number of hazards. While some risks apply to every field, others are industry-specific. Repo companies have to take both into account when deciding how to shield themselves from significant financial setbacks.
No company with physical assets is immune to perils such as acts of nature (earthquakes, floods, wildfires, for instance), vandalism, theft, or accidents. In every industry, important equipment can also break down suddenly, requiring urgent repair or replacement.
Employees also face significant occupational risks - when a car is repossessed, all personal belongings must be taken out of the vehicle. Sometimes, that's an easy job. Agents may also, however, encounter dangerous objects, and sometimes even drugs and syringes, which puts their health at risk. An an employer, you can be held liable for such occupational injuries.
The risks are many, and often, you will not see them coming. In some cases, a major peril can even force your company into bankruptcy. That is why it is so vital to protect yourself with a comprehensive repossession insurance Minnesota plan.
What Type Of Insurance Do MN Repo Businesses Need?
There is, unfortunately, no such thing as a universal commercial insurance plan that would meet the needs of all automobile repossession companies. Each company is unique.
Your number of employees, the volume of cars you repossess, the geographical location and MN legal jurisdiction of your company, are all examples of factors that influence the kinds of coverage you may need.
For this reason, it is essential to consult a commercial insurance specialist and discuss your risk profile in-depth. Together, you'll be able to craft the comprehensive insurance plan that will have your back no matter which peril you may be impacted by.
Having said that, among the most important types of repossession insurance Minnesota that repo companies should be aware of are:
- Commercial Property: This type of insurance shields your company from financial losses caused by damage to or loss of commercial property as a result of perils like acts of nature (hurricanes, floods, earthquakes), vandalism, or theft. It covers your building, but also smaller assets, such as computers, that are present on the property.
- Commercial General Liability: In case your business causes damage to third party property (such as equipment you rent), this type of repossession insurance Minnesota will cover your legal and related costs. It also protects you in the event of a bodily injury claim resulting from an incident that took place on your premises or as a result of your activities.
- Bailee's Liability: As an automobile repossession company, you temporarily take custody of vehicles that you then return to their legal owners. Should vehicle be damaged or lost while in your custody, this type of insurance helps you manage the costs.
- Workers' Compensation: Car repossession employees face a range of occupational health hazards. This type of insurance covers the medical expenses in the case of an unfortunate event, as well as the lost income of the affected employee.
The automobile repossession industry is thriving, but the fact that it faces numerous perils is inescapable. Sometimes, even a single mishap can lead to massive costs. While the types of repossession insurance Minnesota covered here will go a long way toward protecting your business, you may have additional insurance needs.
Make sure you are fully covered, by discussing your individual circumstances with a commercial insurance broker.
MN Repossession's Risks & Exposures
Business auto exposures are high because of the methods used to recover vehicles. Tow truck operators often must act quickly and surreptitiously to remove the vehicle before the borrower returns. This could result in improperly attaching the recovered vehicle to the tow truck.
The vehicles may be required to operate quickly in parking lots and other areas where children and other persons may be present, resulting in bodily injury, or damage to other vehicles. Some vehicles may be driven away instead of being towed, presenting non-owned exposures.
All employee drivers should have valid licenses with their MVRs regularly checked. Random testing for alcohol and drug use should be required. All owned vehicles, especially hoists and tow bars on tow trucks, must be regularly maintained with records retained.
If clients' vehicles are kept on the repossessor's premises, garagekeepers coverage will be needed. Keys to these vehicles should be kept in a locked box inaccessible to non-authorized employees.
Premises liability exposures are minimal because of lack of public access to the office and the garage or open lot where the recovered vehicles are stored. Vehicles stored in the open may be an attractive nuisance to children or other trespassers.
Off-site exposures include damage to borrowers' premises or personal property.
Personal injury exposures include allegations such as assault, battery, discrimination, and invasion of privacy. Policies concerning employee conduct should be established with periodic training provided. There is product liability exposure if the recovery company sells repossessed vehicles for its customers.
Professional exposures may be present, based on specific state licensing and certification regulations.
Workers compensation exposures are high. Employees should be properly trained and supervised. During the repossession process, borrowers may threaten and physically attack employees. Procedures to avoid and prevent confrontations must be in place. Weapons should not be permitted.
The lifting of a vehicle by hoists or other mechanical means can result in injury if the equipment malfunctions. Workers can slip and fall, incur back injuries, be attacked by pets or other animals, or be involved in automobile accidents.
Property exposures are moderate and include an office and a garage or open lot where the recovered vehicles are kept. Ignition sources include electrical wiring, heating, and air conditioning systems. Gasoline, oils, and lubricants inside stored vehicles increase the fire hazard. Oily rags should be kept in National Fire Protection Association (NFPA) approved metal containers to prevent spontaneous combustion.
Recovered vehicles can be targets for theft and vandalism from angry borrowers or other trespassers. Appropriate security controls must be taken, including physical barriers such as fences or gates, lighting to deter access to the premises after hours, and an alarm system that reports directly to a central station or the police department.
Coverage on the property of others is needed because all personal property inside recovered vehicles must be returned to its owner. An inland marine bailees form may also provide this coverage.
Inland marine exposures include accounts receivables from client banks and other financial institutions, computers used to track, monitor, and sell recovered vehicles, and valuable papers and records for all orders for recovery and vehicle titles. Duplicates should be kept off-site to allow for re-creation following a loss. A bailees form may be needed to cover the personal property of others inside the recovered vehicles.
Crime exposures include employee dishonesty for the individuals who recover the vehicles, office employees, and persons who sell the vehicles on behalf of the financial institution. Background checks should be conducted on all employees handling money or recovered vehicles.
There must be a separation of duties between persons handling orders, deposits and disbursements and reconciling bank statements. Endorsements are needed to cover employee theft of customers' property because the vehicles do not belong to the repossessor.
Repossession Insurance Minnesota - The Bottom Line
To protect your repo business, employees and the people you serve, having the right repossession insurance Minnesota coverage is important. To learn what types of policy options are available to you, how much coverage you should invest in and the premiums - speak to a reputable commercial insurance broker.
Additional Resources For Commercial Auto Insurance
Learn about small business commercial auto insurance which includes liability and physical damage protection for vehicles that are used for business purposes.
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The person injured in an vehicle accident may be a child, a wage earning single parent, a brain surgeon, or even a homeless person. The costs of the accident may be relatively small or run into the millions of dollars, depending on the victim and his or her injuries. Do you have the assets to handle such costs?
Trucking operations in this chapter are among the most heavily regulated in the country. All are subject to multiple types of regulation including municipal, state and federal. The regulations are necessary because potential for severe property damage and/or bodily injury is extremely high.
All carry cargo that if not handled appropriately could have serious consequences to the cargo owner and/or the public at large. Those that carry people must prove that they keep their equipment in good condition and that employees operate in a safe, sober manner.
The insurance company pays amounts an insured is legally obligated to pay as damages because of bodily injury or property damage and certain types of pollution events covered by this insurance caused by an accident and resulting from ownership, maintenance or use of covered vehicles.
The obligation to pay is triggered only by accidental occurrences involving vehicles covered under the Business Auto Coverage Form. An eligible pollution event is covered only if it is connected to a covered bodily injury or property damage loss.
It is important that you have the proper Limit of Insurance to protect your operations. This limit is the most the insurance company pays for the total of all damages, including any covered pollution cost or expense resulting from any one covered accident, is the Covered Auto liability limit of insurance on the declarations.
This limit applies regardless of the number of insureds, autos covered, vehicles involved in an accident, premium paid, or number of claims made.
Minimum recommended small business insurance coverage: Building, Business Personal Property, Business Income and Extra Expense, Accounts Receivables, Computers, Motor Truck Cargo, Valuable Papers and Records, Employee Dishonesty, Money and Securities, General Liability, Employee Benefits, Umbrella, Motor Carriers Liability and Physical Damage, Hired and Non-owned Auto & Workers Compensation.
Other commercial insurance policies to consider: Earthquake, Flood, Mobile Equipment, Signs, Warehouse Operators' Legal Liability, Cyber Liability, Employment-related Practices, Environmental Impairment, Underground Storage Tank, Stop Gap Liability and International Coverages.
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