Let’s be honest—no car sales professional wants to verify auto insurance. But without a process in place, your dealership could be inadvertently breaking state law or opening itself up to lawsuits and chargebacks. In this article, we’ll unpack eight compelling reasons your dealership needs an automated insurance verification process to protect your assets. Plus, we’ll share a solution that can help save deals in jeopardy due to a lack of insurance. Let’s dive in!
- About 1 in 8 car buyers are uninsured or underinsured.
According to the Insurance Research Council, 14% of U.S. drivers are uninsured. At Gather, we’ve found that 12.3% of in-store car buyers have some sort of insurance issue—whether they lack insurance, their policy is no longer valid, they’re just a driver on the policy rather than the policyholder, or, worse, the insurance card is fake.
- Insurance cards are easy to fake.
What used to require advanced Photoshop skills can now be accomplished with a simple AI prompt. Unfortunately, some car buyers go to great lengths to avoid paying premiums or, in more severe cases, commit synthetic fraud to steal vehicles. Your dealership can’t afford to rely on printed insurance cards alone.
- Insurance cards don’t reveal if a policy has been canceled.
An insurance card provides only a snapshot of the policy on the day it was printed. If the policy was later suspended or canceled due to nonpayment, you’d have no way of knowing—and relying on that outdated information puts your dealership at risk.
- Insurance is required to register a vehicle in most states.
Insurance is a statutory requirement for vehicle registration in all states except New Hampshire. Your dealership has a legal obligation to verify insurance before delivering a car.
- If an uninsured car buyer gets into an accident, you could face a lawsuit.
Dealers are often perceived as having deep pockets, making your business a prime target for lawsuits if someone you sold a vehicle to without insurance causes an accident and injures another person.
- If an uninsured car buyer gets into an accident, you could face a chargeback from the lender.
Financial institutions require insurance to protect their investments. If a customer without insurance totals the vehicle, you could be left covering the cost.
- Manually verifying insurance can violate the Safeguards Rule.
Speaking with a third-party insurance agent about your customer’s personal information—without a formal agreement in place—is a violation of the Safeguards Rule. Discussing sensitive information in public areas where it can be overheard is also prohibited. Non-compliance can result in hefty fines of up to $46,000 per violation per day.
- Insurance surprises in the F&I office slow down deals.
Wouldn’t it be better to address insurance issues at the point of a demo drive? Waiting until the last minute to discover a problem jeopardizes deals and frustrates everyone involved.
The Solution: Automated Insurance Verification
With so many car buyers uninsured and so many risks tied to improper verification, it’s clear that automated insurance verification is no longer optional. This is where Gather comes in. At the time of a demo drive, the customer simply takes a photo of their driver’s license, their insurance card, and a selfie. Gather digitally connects with the insurance carrier to verify coverage—no consumer login required (because who remembers their insurance password anyway?).
Gather doesn’t just confirm that the policy is active; it also:
- Ensures the policy expiration date is at least one week out—so you know the vehicle is covered until you receive funding.
- Provides coverage limitation details, ensuring the full value of the vehicle is protected.
- Verifies that the policy meets state minimum requirements.
- Confirms whether the car buyer is the policyholder or merely a driver on the policy.
What’s more, Gather simultaneously verifies the buyer’s identity. By checking DMV records, analyzing watermarks on the license, and performing biometric data analysis (comparing the license photo with a selfie), Gather ensures the customer is who they claim to be. Additionally, it checks with a major credit bureau to confirm an established credit history and detect potential fraud.
In fact, Gather’s robust identity verification process even led to the arrest of a synthetic fraudster in Fort Worth, Texas.
Addressing Insurance Gaps Seamlessly
But what happens if a customer is legitimate but lacks sufficient insurance coverage? Gather has that covered, too. With On-Demand Auto Insurance backed by The Allstate Corporation, your dealership can offer immediate coverage—even on nights, weekends, and holidays—with no insurance agent’s license required. Customers pay a fixed daily rate for as long as they need the policy and can transition to a standard policy with any carrier at any time. No more worrying about customers leaving to secure insurance and possibly not returning. Gather ensures you can address insurance issues on the spot and deliver cars the same day.
In today’s fast-paced world of car sales, who has time to deal with insurance headaches? Automated insurance verification isn’t just a smart move—it’s a game-changer for protecting your dealership, keeping things compliant, and making sure every deal runs smoothly. With Gather, you’ve got a partner that takes the stress out of the process, letting you focus on what you do best: delivering great cars and even better customer experiences. So why wait? Say goodbye to insurance hiccups and hello to faster, hassle-free deals!