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Repossession Insurance Policy Information

Repossession Insurance. 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 might repo companies need to carry to protect themselves?

Repossession insurance protects you towing and collateral recovery specialist businesses from lawsuits with rates as low as $97/mo. Get a fast quote and your certificate of insurance now

Below are some answers to commonly asked repossession insurance questions:

• What Is Auto Repossession Insurance?
• How Much Does Repossession Insurance Cost?
• Why Do Repossession Companies Need Insurance?
• What Type Of Insurance Do Repo Businesses Need?
• What Does Auto Repossession Insurance Cover & Pay For?

Why Do Repossession Companies Need Insurance?

Auto repossession companies need insurance for several reasons. First and foremost, it protects them financially in the event of any accidents or incidents that may occur during the repossession process. This includes damage to the vehicle being repossessed, as well as any injuries sustained by the repossession company's employees or any third parties involved in the process.

Additionally, repossession insurance provides coverage for legal costs and expenses should any legal action be taken against the company. This could include disputes with the vehicle's original owner, or any other parties involved in the repossession process.

Insurance also protects the repossession company from any fraud or theft that may occur during the process. This includes theft of the repossessed vehicle, or any money or assets that the repossession company may be holding on behalf of the original owner or lender.

Furthermore, insurance ensures that the repo company complies with all legal and regulatory requirements. This is important as auto repossession companies are required to comply with state and federal laws, as well as industry standards. Without insurance, a repossession company may be at risk of non-compliance, resulting in hefty fines and penalties.

Overall, insurance is a crucial aspect of any auto repossession company's operations as it provides financial and legal protection, protects the company from fraud and theft, and ensures compliance with laws and regulations.

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.

What Does Auto Repossession Insurance Cover & Pay For?

Auto repossession companies can be sued for a variety of reasons, including wrongful repossession, breach of contract, and damage to the vehicle or personal property. In such cases, insurance can protect the repossession company from financial loss by covering the cost of legal fees, settlements, and judgments.

Here are some examples of why auto repossession companies might be sued and how insurance can help:

Wrongful Repossession: If an auto repossession company takes a car that they are not authorized to take, they may be sued for wrongful repossession. Insurance can help cover the legal fees associated with defending against the lawsuit and paying any damages awarded.

Breach of Contract: If an auto repossession company breaches a contract with a lender or debtor, they may be sued for damages. For example, if the company fails to return personal property that was in the vehicle at the time of repossession, they may be liable for the cost of replacing that property. Insurance can help cover the cost of defending against the lawsuit and paying any damages awarded.

Damage to the Vehicle or Personal Property: If an auto repossession company damages a vehicle or personal property during the repossession process, they may be sued for the cost of repairs or replacement. Insurance can help cover the cost of defending against the lawsuit and paying any damages awarded.

In each of these cases, insurance can help protect the auto repossession company from financial loss by covering the cost of legal fees, settlements, and judgments. It's important for auto repossession companies to have adequate insurance coverage to protect themselves and their business from potential lawsuits.

Commercial Insurance And Business Industry Classification

• SIC CODE: 7389 Business Services, Not Elsewhere Classified
• NAICS CODE: 561491 Repossession Services
• Suggested Workers Compensation Code(s): 7225 Automobile Towing & Drivers

7389: Business Services, Not Elsewhere Classified

Division I: Services | Major Group 73: Business Services | Industry Group 738: Miscellaneous Business Services

7389 Business Services, Not Elsewhere Classified: Establishments primarily engaged in furnishing business services, not elsewhere classified, such as bondspersons, drafting services, lecture bureaus, notaries public, sign painting, speakers' bureaus, water softening services, and auctioneering services, on a commission or fee basis. Auctions of used cars and agricultural commodities, such as livestock and produce, are classified in Wholesale Trade.

• Agents and brokers for authors and nonperforming artist
• Apparel pressing service for the trade
• Appraisers, except real estate appraisers
• Arbitration and conciliation services
• Artists' agents and brokers, except performing artists
• Auctioneering service on a commission or fee basis
• Authors' agents and brokers
• Automobile recovery service
• Automobile repossession service
• Automobile shows, flower shows, and home shows: promoters of
• Bartering services for businesses
• Batik work (handprinting on textiles)
• Bondspersons
• Bottle exchanges
• Bronzing baby shoes
• Business brokers (buying and selling business enterprises)
• Charge account service (shopping plates) collection by individual
• Check validation service
• Cloth: cutting to length, bolting, or winding for textile distributors
• Contractors' disbursement control
• Convention bureaus
• Convention decorators
• Copyright protection service
• Correct time service
• Cosmetic kits, assembling and packaging
• Cotton inspection service, not connected with transportation
• Cotton sampler service
• Coupon redemption service, except trading stamps
• Credit card service (collection by individual firms)
• Decoration service for special events
• Demonstration service, separate from sale
• Directories, telephone: distribution on a contract or fee basis
• Divers, commercial
• Drafting service, except temporary help
• Drawback service, customs
• Drive-a-way automobile service
• Embroidering of advertising on shirts, etc.
• Engrossing, e.g., diplomas and resolutions
• Exhibits, building of: by industrial contractors
• Field warehousing, not public warehousing
• Filling pressure containers (aerosol) with hair spray, insecticides, etc.
• Fire extinguishers, service of
• Firefighting service, other than forestry or public
• Flagging service (traffic control)
• Floats, decoration of
• Florists' telegraph service
• Folding and refolding service: textile and apparel
• Fundraising on a contract or fee basis
• Gas systems, contract conversion from manufactured to natural gas
• Handtool designers
• Handwriting analysis
• Hosiery pairing on a contract or fee basis
• Hotel reservation service
• Identification engraving service
• Inspection of commodities, not connected with transportation
• Interior decorating consulting service, except painters and paper
• Interior designing service, except painters and paper hangers
• Inventory computing service
• Labeling bottles, cans, cartons, etc. for the trade: not printing
• Laminating of photographs (coating photographs with plastics)
• Lecture bureaus
• Lettering service
• Liquidators of merchandise on a contract or fee basis
• Mannequin decorating service
• Map drafting service
• Mapmaking, including aerial
• Message service, telephone answering except beeper service
• Metal slitting and shearing on a contract or fee basis
• Meter readers, remote
• Microfilm recording and developing service
• Mounting merchandise on cards on a contract or fee basis
• Music distribution systems, except coin-operated
• Notaries public
• Packaging and labeling service (not packing and crating)
• Paralegal service
• Parcel packing service (packaging)
• Patent brokers
• Patrol of electric transmission or gas lines
• Photogrammetric mapping service (not professional engineers)
• Photographic library service, still
• Photography brokers
• Pipeline and power line inspection services
• Playwrights' brokers
• Post office contract stations
• Presorting mail service
• Press clipping service
• Printed circuitry graphic layout
• Process serving service
• Produce weighing service, not connected with transportation
• Product sterilization service
• Promoters of home shows and flower shows
• Racetrack cleaning, except buildings
• Radio broadcasting music checkers
• Radio transcription service
• Recording studios on a contract or fee basis
• Redemption of trading stamps
• Repossession service
• Restaurant reservation service
• Rug binding for the trade
• Safety inspection service, except automotive
• Salvaging of damaged merchandise, not engaged in sales
• Sampling of commodities, not connected with transportation
• Scrap steel cutting on a contract or fee basis
• Shoe designers
• Showcard painting
• Shrinking textiles for tailors and dressmakers
• Sign painting and lettering shops
• Solvents recovery service on a contract or fee basis
• Speakers' bureaus
• Sponging textiles for tailors and dressmakers
• Styling of fashions, apparel, furniture, and textiles
• Styling wigs for the trade
• Swimming pool cleaning and maintenance
• Switchboard operation of private branch exchanges
• Tape slitting for the trade (cutting plastics, leather, etc. into widths)
• Tax collection agencies: collecting for a city, county, or State
• Tax title dealers: agencies for city, county, or State
• Telemarketing (telephone marketing) service on a contract or fee basis
• Telephone answering, except beeper service
• Telephone solicitation service on a contract or fee basis
• Textile designers
• Textile folding and packing services
• Time-share condominium exchanges
• Tobacco sheeting service on a contract or fee basis
• Tourist information bureaus
• Trade show arrangement
• Trading stamp promotion and sale to stores
• Trading stamp redemption
• Translation service
• Water softener service
• Weighing foods and other commodities not connected with
• Welcoming service
• Window trimming service
• Yacht brokers

Repossession Insurance - The Bottom Line

To protect your repo business, employees and the people you serve, having the right repossession insurance 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.

• Insurance Automotive Terms Glossary
• Amazon Delivery Drivers
• Ambulance Services
• Big Rig Truck
• Bobtail Non-Trucking Liability
• Charter And Tour Bus
• Commercial Auto
• Commercial Auto Liability
• Commercial Electric Vehicle Insurance
• Commercial Van
• DoorDash, GrubHub & Uber Eats Drivers
• Dump Truck
• Food Truck
• Freight Forwarder
• Household Goods Moving
• Limousine
• Motor Truck Cargo
• Non-Owned And Hired Auto Liability
• Owner Operator
• Pizza Delivery
• Repossession
• Taxi
• Tow Truck
• Truck
• Specialty Automobiles, Trucks And Recreational Vehicles
• Specialty Physical Damage

Commercial auto insurance is a type of insurance that provides coverage for vehicles used for business purposes. This includes vehicles such as delivery trucks, company cars, and other vehicles that are used to transport goods or employees.

Commercial auto insurance is necessary for businesses that rely on their vehicles to conduct their operations. It helps to protect the business from financial losses due to accidents, theft, or other unexpected events. It also helps to protect the business from potential lawsuits that may arise from accidents involving their vehicles.

There are several types of coverage options available under business auto insurance policies. These include:

• Liability coverage, which covers damages or injuries that you or your employees cause to others while operating a business vehicle.
• Physical damage coverage, which covers damages to your own vehicle, is also available.
• Other coverage options may include medical payments, uninsured or underinsured motorist coverage, and rental reimbursement.

It is important for businesses to carefully consider their commercial auto insurance needs and to choose a policy that offers the right level of coverage. This can help to ensure that the business is protected in the event of an accident or other unexpected event.

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.