Page 138 - CARS Standard Program

INSURANCE Explanation of Coverages
To most, reading an insurance contract is about as dry as Texas trail dust and as exciting as watching grass grow. It is, however, of critical importance that the collateral Recovery Agency owner has a basic understanding of the various types of coverage needed to protect his/her business and his/her client.
Following is a brief explanation of each coverage and examples of situations where each would apply. These examples are not intended to be preparatory to a degree in the field of insurance nor are they to provide legal opinions on insurance coverage or contracts. Rather, they are to impress upon the recovery agency owner the importance of obtaining coverage from insurance agents and carriers who are familiar with the insurance needs of the collateral recovery industry.
General Liability with Wrongful Repossession Endorsement
This coverage, sometimes described as “premises” liability, is the foundation for protection of the collateral Recovery Agent and the creditor, and responds to covered claims specifically involving the act of collateral recovery. The Wrongful Repossession Endorsement should contain the following or similar language:
“Garage operations include all operations necessary or incidental to a repossession business, including Wrongful Repossession.” This language should be found at the bottom of the Certificate of Insurance where the Certificate reads, “Description of Operations.”
Example of Premises Coverage: A debtor arrives at the Recovery Agency’s office to reclaim personal property. While there, the debtor trips on a loose step and falls, breaking a leg and sustaining other injuries. If the debtor files a claim, this coverage would respond.
Example of Wrongful Repossession Endorsement: As the defaulted collateral is being hooked up to the tow truck the debtor appears and begins yelling at the Recovery Agent and orders him to stop the repossession. The debtor attempts to open the door to the collateral but the Recovery Agent impedes his entrance while his helper continues to hook up the collateral. They then leave with the collateral while the debtor continues to yell for them to stop. By this time neighbors have come to the scene. If a claim is filed against the Recovery Agent and the helper for Breach of the Peace and Wrongful Repossession, the Wrongful Repossession Endorsement will provide defense costs. But if the court finds that the Recovery Agent and helper committed criminal acts, the carrier will not pay any monetary damages because all insurance contracts exclude coverage for criminal acts.
(A definition of Wrongful Repossession is found in The Recovery Process, Section 6 of this manual.)