Several insurance companies are offering a consignment coverage option in their RV policies.
Last year, FMCA.com reported that typical RV insurance policies contain an exclusion pertaining to motorhomes placed on a consignment lot.The exclusion essentially removes physical damage coverage from the policy. If a consigned motorhome becomes damaged or destroyed by fire, vandalism, theft, storm or a collision, the policyholder would be in danger of having their claim denied.
What is consignment?
Many dealerships sell motorhomes on consignment on behalf of motorhome owners. While for sale with the dealership, the RV owner retains title of the RV until the vehicle is sold.
The owner and the dealer typically enter into a contractual relationship where the dealership has a period of time to sell the unit. The most common contract length is 90 days.
Motorhomes under consignment are seldom, if ever, insured under the dealership’s policy. The motorhome owner is exposed to losses because RV insurance policies will most likely consider consignment as an unacceptable usage.
When the contract expires between the dealership and the RV owner, they either part ways or enter into a new contract.
Now, National Interstate Insurance Company and Recreation Insurance Specialists offer policies that accept losses occurring while a motorhome is on consignment or held for sale by a third party.National Interstate
National Interstate, a commercial member of FMCA since 1997, offers a consignment coverage endorsement through independent insurance agencies in 27 states.
National Interstate’s Consignment Physical Damage Endorsement provides comprehensive and collision coverage while the motorhome is consigned to a dealer, said Jason Sinkovitz, business development manager for National Interstate.
Collision Coverage provides physical damage coverage for losses incurred while the motorhome is in motion, such as hitting another vehicle on a test drive. Comprehensive coverage provides physical damage coverage in the event of such losses as storm damage, fire, vandalism, theft and falling tree limbs while the motorhome is on a consignment lot.
Existing National Interstate customers can add this coverage as an endorsement to their policy by contacting their insurance agent, Sinkovitz said. “If someone is not a National Interstate RV policyholder, they can buy a National Interstate RV policy and add the consignment endorsement immediately.”
An agent appointed by National Interstate can provide a quote for the consignment endorsement. For a list of agents, visit www.nationalinterstate.com/products/spl/rv/#Agents.
National Interstate offers a five-percent policy discount to FMCA members in most states and has insured thousands of FMCA members. The company is celebrating its 20th anniversary in 2009. “We have been offering specialty RV insurance for over a decade,” Sinkovitz said.
Recreation Insurance Specialists, LLC, also an FMCA commercial member, has been offering consignment coverage for about a year in its Blue Sky RV Insurance program, said Eric Raudins, chief operating officer.
The cost is based on 10 percent of the comprehensive and collision premium of an annual policy. Based on average motorhome values, Blue Sky consignment coverage would cost approximately $40 for six months of coverage, Raudins said.
Policyholders can cancel the coverage as soon as the vehicle is sold.
“The nice thing about the Blue Sky RV consignment coverage is that you only pay for what you use,” Raudins said. “So once you purchase a Blue Sky policy and elect consignment coverage, it’s as simple as removing the coverage and receiving a pro-rata return of premium once the unit is sold.”
Blue Sky policies with the consignment option are available in 32 states. They are underwritten by Companion Property and Casualty Insurance Company and are written in the state in which the RV is registered.
Blue Sky RV Insurance provides a five-percent discount to FMCA members. Call (866) 484-BLUE (2583) to find an agent, or visit www.blueskyrvinsurance.com for more information.
Not all RV insurance coverages are available in all states, and coverages can vary from state to state.
National Interstate policies also are based on the registration state of the vehicle, not necessarily the state of the consignment dealer. A motorhome registered in Ohio (one of the states where coverage is available) and placed on a consignment lot in Virginia (not one of the states), is eligible for the consignment endorsement. A motorhome registered in Virginia and placed on a consignment lot in Ohio, is not eligible.
Long time coming
National Interstate has been aware of the growing market need for consignment coverage by RV owners, Sinkovitz said. “We had been talking to some of our agency partners about it. When FMCA’s article came out, it really increased the urgency to actually get something to the market.”
National Interstate contacted more than 800 members of The National RV Dealers Association (RVDA) and found that about 91 percent of the respondents have consignment programs.
“In today’s economic climate, more RV dealerships are embracing consignment as a source of inventory and revenue,” Sinkovitz said. “And more RV owners are utilizing consignment dealerships as a way to sell their RVs.”
He estimates there are thousands of consigned RVs currently at risk because they do not have this coverage.
“The insurance industry hasn’t done a great job of educating the dealers, so dealers are not able to coach these people and let them know that their [physical damage] insurance may be voided if they consign. If there was a catastrophic storm or a fire or anything that came through, the losses could be pretty substantial.”
Blue Sky also recognized the need to provide consignment coverage based upon the standard exclusions of most insurance policies. “There is typically an exclusion in most policies when an RV is placed in the care, custody and control of somebody else for the purposes of being sold or leased,” Raudins said. “The dealers’ insurance will not ordinarily cover the coach because they do not take ownership of it, so they don’t have an insurable interest in it.”
Raudins has noticed an increase in the number of consigned RVs during the economic downturn, but he said consignment coverage has always been a legitimate need. “Even when the economy is doing well there are people who want to put them on consignment. And you’re sort of playing Russian roulette if you do it with your typical RV or auto policy and don’t understand policy exclusions that may be invoked if there is a loss.”
'Get the word out there'
Jack Ingle is business development manager for PoliSeek (formerly Aon Recreation Insurance), which sells National Interstate policies. After many years in the insurance business, he’s pleased to be able to offer consignment coverage to RV owners.
“It’s definitely a good thing. We need to get the word out so the people know it’s available,” he said.
Ingle spreads the word at his insurance seminars, such as the one at FMCA’s Bowling Green, Ohio, convention in July 2009. “One gentleman in my seminar had an $800,000 coach on consignment and he wasn’t aware of the insurance implications. He found out about it at the seminar.”
At his seminars and in dealings with PoliSeek customers, Ingle emphasizes that consignment coverage is not included in existing policies. Policyholders must choose to add it. At seminars, he distributes a handout containing a list of agencies that offer optional endorsements, including consignment coverage.
In the past when Ingle has visited dealerships, he’s found that dealers didn’t know about this gap in coverage. “They were just telling consignors to leave their regular insurance in force. Some dealers know about it and explain it to their customers, while other dealers feel it’s not their problem. So, we have to get the word out there.”