Selling Vehicle Insurance Policies at your Dealership? Be Cautious.

During this past legislative session, NHADA, with your help, successfully defeated a bad piece of legislation that would have significantly hampered your ability to assist your customers with obtaining financing. The bill, would have made it illegal for a dealer to assist a customer in obtaining an insurance policy for their new vehicle, even if the policy was required by the finance source. With over 85% of vehicle purchases being financed this function is critical. The bill was filed at the request of the NH Independent Insurance Agents and the Professional Insurance Agents of NH.

This harmful legislation would have disrupted the Voluntary Protection Product (VPP) marketplace, one that we know is of great value to consumers. The supporters of the bill used anecdotal stories alleging that dealers forced customers to purchase a new vehicle insurance policy despite one already being in place and the coverage was either substandard or unnecessary.

NHADA urges caution and transparency when insurance coverage is discussed at your business. The NH Insurance Department issued a bulletin on this subject in November of 2018. It can be found here. It includes four sample scenarios to illustrate what constitutes soliciting or selling insurance, a practice that can only be provided by appropriately licensed people or businesses. Please familiarize yourself with these scenarios.

• Example #1: Salesperson advises a consumer that he or she could save money by purchasing automobile insurance from insurance company A.

The salesperson is "soliciting" automobile insurance because he or she is recommending or urging a person to apply for a motor vehicle insurance policy from a particular company. The salesperson would need to have an RSA 402-J license to provide this advice.

• Example #2: Salesperson assists a consumer with obtaining insurance online by using the salesperson's computer to search for insurance for the consumer while the consumer watches.

The salesperson is improperly "negotiating" motor vehicle insurance for the customer by assisting the customer to "obtain" it. The salesperson would need to have an RSA 402-J license to provide this service .

• Example #3: Salesperson offers the customer the use of a computer at the dealership so that the consumer can search for insurance, but the computer is set to the website of a particular insurance company.

The salesperson is improperly "soliciting" motor vehicle insurance by virtue of asking or urging the consumer to apply for insurance with a particular company. The salesperson would need to have an RSA 402-J license to engage in such activity.

• Example #4: Automobile dealership maintains a computer terminal linked to the internet for use by consumers.

A consumer may use the terminal to search for insurance as long as the salesperson does not operate the computer, the computer is not preset to any particular insurance company's website, and the salesperson does not, in any way, recommend that the consumer apply for insurance from a particular company. The salesperson may suggest that the consumer visit a site that provides general advice on the purchase of insurance. The salesperson would not need to have an RSA 402-J license to engage in these activities.

If you are using a third-party vendor/company to assist your customers with insurance issues, be sure that they are properly registered and engage customers appropriately.

Information on becoming a licensed producer with the NH Insurance Department can be found here.

For questions on this or any other legislative or regulatory matter I can be reached at: dbennett@nhada.com or (800) 852-3372.