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Courtesy car insurance cover eating into dealers' bottom lines

Dealers are eating into their bottom line by “taking up the slack” caused by a 30% surge in the number of courtesy cars insured through their own motor trade policy during the last four years, according to DCML.

Data from the courtesy car management and day-rate insurance provider shows that dealers are now insuring over 24% of all courtesy car bookings, up by nearly a third since 2008, as the number of self-insured customers plummets.

While managing a courtesy car fleet is an essential, business-critical function of any workshop or dealership, private motor insurers are, increasingly, excluding courtesy car protection as an automatic or free benefit and the cost of obtaining the necessary cover note is also mounting.

With nearly 50% of dealers encountering a courtesy car loan which results in an accident each year and the average cost of claims standing at £2,727, DCML’s analysis shows that the customer service benefits of the courtesy fleet could be all but wiped out in higher premiums and the loss of the ‘no claims’ record.

DCML managing director, Vince Powell, said: “In only a few years, the rate at which dealers are insuring courtesy cars for their customers has increased significantly.

“Clearly, they are taking up the slack left by private vehicle insurance policies which, with the advent of cheap online insurance, are becoming less likely to include automatic or free cover for courtesy cars.

“Protecting the motor trade policy should be a priority but, by piling on extra risk, dealers could end up paying more. Day-rate cover is the best solution; dealers can turn a profit easily and the customer is fully-covered at minimal cost.”

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  • BusyRoly999 - 25/10/2012 13:16

    Sound like too many have cut the price to meet referral work requirements and then got sucked into providing additional services for far less than they did while fixed costs have gone through the roof. Or as always and forever, many traders simply offer to undercut to get the business without ever calculating that the competitor was already on a loss leader!