Let us pretend you decide to sell a car. Regardless if you sell it online, at a live auction, through a dealer or privately, it is important to know when the appropriate time is to cancel your insurance. Risky exposures occur when you sell a car, and you may or may not be insured if something goes wrong.
You have decided to sell your car with an auction company. You may choose to hire a professional photographer to photograph your car for the auction. Photoshoots can have many risks of their own. I have been a part of several automotive photoshoots. The simple act of moving a car from one shot location to another is enough to scramble your sensible mind. Now, add in the excitement as you park your car at the perfect angle with the perfect sunset background. That joyous moment may distract you from setting the parking brake or even looking both ways before crossing the street. Trust me, I have seen it happen. Keep your wits about you. Lastly, do not assume your photographer has insurance coverage for your car while he is shooting it. Remember my rule of thumb – CYA (Cover Your Assets) so you have your insurance company working for you.
Next, you hire a professional transporter to haul your car to the auction. The moment you hand over your keys to a third party the safety and security of your car is out of your control and the risk level goes up. Bad things do happen to cars while being transported. A quick Google search will show you dozens of accident examples with rolled over trailers, vehicles on fire and even collisions with trains. Do not assume the transport company has insurance to fix your car. Remember when shipping your car, you can take control and CYA with your own insurance. You cannot control what can go wrong or any one else’s insurance.
When working with auctions and dealers you need to be mindful of their consignment agreements. They may have a hold harmless or waiver of subrogation clause buried in them. Familiarize yourself with them and review your own insurance policy to make sure it will respond in the event of a claim while at the auction. The auction consignment agreements are particularly important for you as the seller or the buyer. It should define the transaction process. The rules, roles and responsibilities of all parties. If you cancel your insurance too soon and damage does occur to your car, you are without the support of your own insurance company. Instead, you will be faced with the clauses in the consignment agreements you signed. You are then at the mercy of the auction companies’ insurance but only after they file a claim and for their adjuster to find coverage in their policy for your car. Wishful thinking at best. Take control and CYA.
Some sellers take the approach, “out of my garage, off my insurance policy.” This is completely backwards. This is one of the most important times to CYA and make sure your policy is active. While your car is in the custody of the auction company, they are likely to move your car during the auction. I have seen auction staff and volunteers drive consigned vehicles, most of the time safely. However, Murphy’s Law is always riding shotgun and I have seen a variety of innocent behaviors result in damage to sellers’ vehicles.
Some of you may remember what happened in 2010 during the annual Scottsdale Collector Car Auction Week. On January 22nd, 2010 Mother Nature unleashed a catastrophic winter storm that blew through Russo and Steele’s auction venue uprooting their enormous auction tents. One tent was picked up like a tissue and tossed onto nearby Interstate 10. The remaining auction tents fought against the winds while some of the telephone pole size tent poles bounced off cars like windchimes. The tents straps were anchored into the ground with long metal spikes the size of your biggest prybar. When the tents blew over these spikes whipped out of the ground and sliced through cars like a can opener. The fallen tent material draped over cars like an old tarp. The high winds thrashed against the tenting scuffing and sanding down every car they touched. Thankfully, no one was seriously injured. I was there working with Hagerty and we were allowed onsite early the next morning to help triage and assess damage. The carnage was worse than the police car pileup in The Blues Brothers. Many of the auction cars had some form of damage ranging from scratched paint from the blowing sand to being pancaked by giant tent poles.
As horrible as the site was to see, what was more devastating was standing side by side with an owner, looking at their damaged car that had not yet gone through the auction and learning they removed coverage from their car the week prior when they shipped it to the auction. It was shocking how many sellers cancelled their coverage before the unimaginable happened in Scottsdale that week. The few dollars these sellers saved by cancelling their insurance early was not worth the grief and time lost. I still shake my head in disbelief about the series of events that unfolded in Scottsdale in 2010.
Prematurely removing your insurance takes away your safety net during a period that has a much higher risk of something going wrong. The insurance company would much rather backdate your policy and give you a refund than you be without coverage. It is not worth gambling with Murphy’s Law. When in doubt, CYA first!
– Adam Martin
