What it does
Dealers routinely hand vehicles to buyers and test drivers and buy vehicles from the public, which exposes them to being defrauded in vehicle transactions. False Pretense Coverage CA 25 03, an Auto Dealers Coverage Form endorsement, is ISO's coverage for false pretense losses; its wording defines the transactions covered. The Massachusetts residual market manual rates it on inventory value including the wholesale floor plan value.
Who needs it
Franchised and independent dealers, especially used-car dealers who buy from the public and allow unescorted test drives.
Key points
- It attaches to the Auto Dealers Coverage Form; the 03 06 edition was a garage form endorsement.
- Read the endorsement's limit, deductible and the situations it describes.
Quoting notes
Ask about buyer identification procedures, title checks on purchased vehicles, test-drive policies and past losses from bad checks or stolen-vehicle seizures.
