Imagine you’re watching a parade, eating your popcorn, watching children scramble for candy thrown from floats, and staying a safe distance away from those clowns who always seem to be in the way. The local Auctioneer drives by in his truck, pulling behind him a trailer with a freshly detailed and sparkling motorcycle, advertising both the motorcycle and the upcoming auction he has in a few weeks. The motorcycle was repossessed and is now owned by the bank.
As he rounds the corner, your heart races and you have a sharp intake of breath that happens when you see the motorcycle, which apparently was not properly tied down, tumble off the trailer in what feels like slow motion, as it becomes one with the street. Thankfully no one was hurt, but I can’t say the same for the motorcycle. This once beautiful motorcycle now looks like it went through a mini war. The sparkle and shine are all gone! Who’s going to pay to fix this once beautiful motorcycle? Does the seller have insurance?
Where’s the coverage? At IT Risk Managers, we tell every auctioneer that “Your contract should state that the seller is responsible for insuring their items.” But this was a repossessed motorcycle, so the seller is now the Bank, and the Bank told you that “they don’t have coverage and that you, the auctioneer, were responsible for the care, custody and control of their items.” This is pretty typical when dealing with Banks or the Court System when auctioning items that are repossessed or for a bankruptcy situation.
Where’s the coverage? Since a motorcycle is a motorized vehicle, with a title, wouldn’t it be covered under an auto policy? This is logical, but not in this case. In this situation, the seller is the bank. If the bank did a big repo business, they might have a garage keeper’s policy, but in this case the Bank told the auctioneer that he would need to have the motorcycle insured. A garage keeper’s policy is a must have policy for any auctioneer that does a lot of vehicles or has an Auto Dealer license.
But, in this situation, because the item (the motorcycle) was in the Auctioneer’s care, custody and control and “being transported not driven”, the Auctioneer had Property of Other’s insurance for items in his care custody and control while in transit. IT Risk Managers was able to get the insurance company to trigger a claim under this coverage section of the policy. A claim was filed, and a claims adjuster was assigned to assess the situation and determined how much it would cost to fix the motorcycle (a whopping $11,000!) and then authorized payment. All this took less than 30 days.
The Auctioneer only had to pay the deductible (in this case $500) to get the motorcycle fixed. Without the Property of Other’s coverage while in transit, the Auctioneer would have been out $11,000 – that’s ELEVEN THOUSAND DOLLARS – to fix the motorcycle before it could be sold in his upcoming auction.
With Property of Other’s insurance, you’re covered up to a limit (certain dollar amount) for items you have in your possession that belong to someone else. Some items like jewelry can have a per item sub-limit. But if you have an auction house and accept items on consignment to sell at a later date, or if you do online auctions and have possession of the seller’s items, you will want to have this coverage.
At IT Risk Managers, these limits are reviewed annually, and you can adjust accordingly to be sure that you are adequately covered. Sometimes it is necessary to increase this coverage option midterm and this can also be accommodated.
If you normally specialize in estates and household items at your Auction House, but you know that next month you’ll have a Seller consigning an estate and his entire sports memorabilia collection worth 3 times your property of other’s limit, you’ll want to call IT Risk Managers and increase your coverage to be sure that you are adequately covered for this new risk and exposure..
Bottom line: You really want to know….Where’s the coverage? Property of Other’s insurance is an absolute necessity if you take possession (care, custody and control,) of a Seller’s item. Cross your fingers that you never need it, but if and when you do, you’ll be glad you have the coverage to help with those costly claims. Always remember just because you don’t buy insurance doesn’t mean that the risk or exposure went away, it just means that you are self-insuring.
IT Risk Managers is a full-service insurance agency and we can help with any of your auctioneer insurance needs; including but not limited to, General Liability, Professional Liability (Errors & Omissions), Real Estate E&O, Property coverage, Workers Compensation, Commercial Auto, Inland Marine, Bonds and more.
If you have any insurance questions or would like to schedule an appointment, call us at 517-381-9909. Please don’t hesitate to give us a call as well; we would love to hear from you!