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Risk Theory Answers Demand for Auto Dealers’ Open Lot Cover

Auto dealerships are a volatile niche for insurers. With some programs exiting the market, Risk Theory is stepping into the gap with a product that helps auto dealers manage significant risks to their inventories, including hail, flooding, collision, theft and fraud.
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PRODUCT: Dealer open lot program for franchised and non-franchised automobile dealers

COMPANY: Risk Theory Insurance Services, Oklahoma Specialty Insurance Co.

BEST RATING: A– (Excellent)

AVAILABILITY: Coverage is available through independent agents. Program commission starts at 10%.

FOCUS: Auto dealerships are a volatile niche for insurers. With some programs exiting the market, Risk Theory is stepping into the gap with its Risk Point VIP Program. The product helps auto dealers manage significant risks to their inventories, including hail, flooding, collision, theft and fraud.

The program insures about 3,200 dealerships through a management team with more than 100 years of combined experience in the auto dealer insurance segment, says Brian Atkinson, vice president of marketing at Risk Theory. The company’s suite of products also includes franchise-heavy truck garage operators and non-franchise garage programs.

In the event of a catastrophic loss, Risk Theory says its adjusters arrive on site within 24-48 hours for inspection and loss adjustment to limit the dealer’s down time. The company aims to “provide superior service, fairly priced products and timely claims payments,” says Bryan Wilburn, Risk Theory’s founder and chief executive officer.

UNDERWRITING: Available coverages include windstorm, hail and flood. Weather coverage includes a unique aggregate deductible. Also included are economic loss at maximum of $2,500 for new vehicles; $2,500 for miles added to the odometer of a stolen new vehicle; spot delivery coverage and false pretense; coverage for stored off-lease vehicles; and dealer “holdback” coverage on total losses to new vehicles. A margin clause provides coverage to 125% of the location limit in the event that limit is exceeded, excluding flood or earthquake losses. The company provides incentives for dealers to protect their vehicles from weather-related losses through reimbursement.

“We understand the unique exposures for auto dealers and the importance of offering weather aggregate deductibles, which allows the dealer to protect his inventory and satisfy lender requirements,” says Aaron Miller, Risk Point’s senior vice president of underwriting & operations.

Loss prevention services include Risk Point Alert, the proprietary smart phone app available to all program dealers. The weather application sends push notifications to a mobile device when severe weather is within 30 miles, 20 miles and 5 miles of a target auto dealership. Given increasingly volatile weather, this tool provides auto dealers with warnings to help them decide how to protect their auto inventory. Protecting autos improves dealers’ profitability by minimizing damage and controlling insurance costs.   

On submissions, underwriting is based on the dealer’s individual loss experience, size and location. The company reports an average turnaround time of four days, with the capability of providing a quote within hours if necessary. Payment is 15% down and 10 monthly payments. No monthly reports of values are required from dealers.

MINIMUM PREMIUM: Not disclosed.

TARGET: Franchised and non-franchised auto, truck and motorcycle dealers with more than $250,000 in inventory.

COVERAGE TERRITORY: All U.S. jurisdictions, including coastal areas.

CONTACT: Brian Atkinson, vice president of marketing; Risk Point LLC, Two Galleria Tower, 13455 Noel Road, Suite 2300, Dallas, TX 75240; 469-310-9142.

Ronimarie Acord is an IA contributor.