Most dealerships finance their inventory through a floorplan lender. That means the bank has a financial interest in the vehicles on your lot until they are sold.
Here is where problems happen.
Vehicle values have increased, but many dealerships are still carrying open lot limits based on older inventory totals. When limits do not match actual exposure, a serious coverage gap can form.
Why This Matters
If a hailstorm, wind event, fire, or theft damages your inventory:
- Insurance may cap payment at your policy limit
- Coinsurance penalties may reduce payouts
- You could still owe the lender the remaining balance
In Texas, hail alone makes this a major risk.
What Dealers Should Review
- Current open lot limit vs. peak inventory value
- Floorplan balance vs. insured amount
- Loss payee wording for the lender
- Deductible structure and coinsurance clause
If those numbers have not been reviewed recently, there is a strong chance of underinsurance.
At Hawk’s Bay Insurance Group, we help dealerships review these gaps before a loss happens.
A quick coverage check today can prevent a major financial hit tomorrow.