Do You Write New Auto Dealers? 

Ford Motor Company recently began offering a bailment and component installation agreement to auto dealers. Here’s what it’s about and how it could create challenges from an errors-and-omissions standpoint.

About the Agreement

The agreement allows dealers to store vehicles at the dealership while waiting for components to complete the vehicle. 

• Once the components are available, they are supplied to the dealer who then installs them. 
• Once the vehicles have been completed, the dealer then pays for the vehicle and takes over the title. 
• Dealers cannot sell the vehicles until they have been completed, paid for, and the dealers have acquired title; however, they are responsible for any damage to the vehicles while storing them and are required to have them insured. 

The Challenges to Agents Covering New Auto Dealers

• It may not be a carrier’s intention to cover any new vehicle inventory owned by the manufacturer under the policy definition of Garagekeepers coverage. However, coverage may be available under Dealers Physical Damage. 
• Ask your auto dealer clients if they are participating in the Ford bailment. If so, clarify their carrier’s position regarding coverage. Taking this action will both help protect your agency from E&O claims and provide a high level of service to your clients.