WO2008016350A1 - Assurance sur la moins-value - Google Patents

Assurance sur la moins-value Download PDF

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Publication number
WO2008016350A1
WO2008016350A1 PCT/US2006/029952 US2006029952W WO2008016350A1 WO 2008016350 A1 WO2008016350 A1 WO 2008016350A1 US 2006029952 W US2006029952 W US 2006029952W WO 2008016350 A1 WO2008016350 A1 WO 2008016350A1
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WO
WIPO (PCT)
Prior art keywords
vehicle
dealer
policy
time
buyer
Prior art date
Application number
PCT/US2006/029952
Other languages
English (en)
Inventor
Marcos Salas
Original Assignee
National Autos Llc
Priority date (The priority date is an assumption and is not a legal conclusion. Google has not performed a legal analysis and makes no representation as to the accuracy of the date listed.)
Filing date
Publication date
Application filed by National Autos Llc filed Critical National Autos Llc
Priority to PCT/US2006/029952 priority Critical patent/WO2008016350A1/fr
Publication of WO2008016350A1 publication Critical patent/WO2008016350A1/fr

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Classifications

    • G—PHYSICS
    • G06—COMPUTING; CALCULATING OR COUNTING
    • G06Q—INFORMATION AND COMMUNICATION TECHNOLOGY [ICT] SPECIALLY ADAPTED FOR ADMINISTRATIVE, COMMERCIAL, FINANCIAL, MANAGERIAL OR SUPERVISORY PURPOSES; SYSTEMS OR METHODS SPECIALLY ADAPTED FOR ADMINISTRATIVE, COMMERCIAL, FINANCIAL, MANAGERIAL OR SUPERVISORY PURPOSES, NOT OTHERWISE PROVIDED FOR
    • G06Q40/00—Finance; Insurance; Tax strategies; Processing of corporate or income taxes

Definitions

  • the present invention relates to a method for compensating policyholders for the difference between the amount owed on a vehicle and the unadjusted fair market value of a vehicle at the time the vehicle is traded with a participating vehicle dealer.
  • a newly purchased vehicle immediately depreciates by up to twenty percent in value when it is driven from the dealer's lot. That is, the value of the "used” vehicle is less than the value of the "new” vehicle.
  • This fact combined with the practice of many purchasers to finance vehicles with little or no down payment for up to 72 months results in the amount owed on the vehicle being substantially more than the vehicle is worth for a considerable period of time after purchase.
  • This difference in value, known as negative equity or being "upside down” continues until the purchaser has made sufficient payments to reduce the outstanding amount of the loan to an amount that is less than the fair market value of the vehicle.
  • many vehicle owners desire to trade their vehicle while the value of the vehicle is still less than the amount of the outstanding loan.
  • the owner finds at the time of trading that the vehicle, instead of serving as a down payment on a new vehicle, in fact necessitates the payment of an amount in addition to the cost of the new vehicle to cover the negative equity in the old vehicle. In many instances, the owner is able to finance this additional amount along with the price of the new vehicle, increasing his payments and perpetuating the negative equity deficit with the new vehicle.
  • Gap insurance is available to protect the owner from the financial impact of negative equity in limited circumstances where a purchased or leased vehicle is stolen or totaled in an accident. Gap insurance is purchased by the buyer or lessee at the time the vehicle is purchased or leased and paid for with monthly premiums over the period of the loan or lease. If the vehicle is stolen or totaled during the period of the loan or lease, the insurer pays the difference in the amount owed on the vehicle less the fair market value of the vehicle at the time the vehicle was stolen or totaled, and less any contractual deductible amount.
  • a gap insurance equivalent is not available to cover the difference between the loan amount on a purchased vehicle and its actual value if the vehicle is voluntarily traded before the fair market value of the vehicle exceeds the amount of the outstanding loan.
  • a method to minimize the financial impact of this gap would be of value to the vehicle owner and also to the vehicle dealer, since the owner would be motivated to trade earlier and again with the vehicle dealer.
  • the objectives of the present invention are achieved through issuance of a policy similar in format to an insurance policy to purchasers of vehicles from a participating dealer or a dealer within a selected group of participating dealers.
  • the policy provides that the issuer of the policy, referred to herein as the insurer, will pay the difference between the amount owed on the vehicle and the unadjusted fair market value of the vehicle less any deductible amount, if the vehicle is traded after the end of the predetermined time period.
  • the fair market value of a vehicle is determined by downwardly adjusting the market value of a vehicle for adjustment factors including any excess wear and excess mileage.
  • the amount of these adjustment factors cannot be reasonably estimated at the time the policy is issued. Therefore, the policy will normally provide for payment based on the value of the vehicle before reduction of the vehicle's value by these adjustment factors, i.e., the unadjusted fair market value of the vehicle.
  • the unadjusted fair market value of a vehicle at the time of trade is normally determined by reference to published value guides, such as guides published by NADA, Edmunds or Kelley.
  • the insured vehicle will be an automobile or a truck.
  • vehicle as used herein also includes SUVs, motorcycles, small watercraft, snow mobiles, ATVs, recreational vehicles, etc.
  • the adjustment factors and the manner of determining the unadjusted fair market value of the vehicle may vary depending on the type of vehicle.
  • a vehicle originally purchased for $25,000 its unadjusted fair market value may be $10,000 at the end of 3 years from the purchase date, before deductions for wear and excess mileage.
  • the amount of the outstanding loan at the end of the 3 years may be as much as $13,792, assuming that the vehicle was financed for 60 months with no down payment.
  • the negative equity amount of the vehicle would be $3,792, plus any decrease in value due to excess wear and mileage and any other adjustment factors.
  • the owner would need to pay this negative equity amount or finance the amount along with the amount financed on the purchase of the new vehicle.
  • the insurer would pay the dealer this amount, except for loss in value attributable to the adjustment factors, relieving the purchaser from this financial burden.
  • the purchaser would have purchased negative equity insurance at the time the original vehicle was purchased and would have paid premiums on the insurance from the time of purchase until the time the vehicle was traded after the end of the 3 years. However, the total of the premiums paid would be less than the amount of the amount paid by the insurer, resulting in a net savings to the purchaser. The amount of the premiums may be further reduced if the purchaser elects to pay a deductible amount at the time the vehicle is traded, with the deductible amount being subtracted from the amount to be paid by the insurer.
  • the insurer is able to cover the difference in the amount paid and the premiums received, plus its overhead expenses and profit margin, due to the fact that many purchasers will not trade their vehicle within a short time after the available trade date. Since the gap decreases as the amount of the loan decreases and the vehicle depreciates at a slower rate, the amount owed by the insurer will decrease, or even be eliminated, as the time between the initial purchase and the end of the predetermined time.
  • a condition of payment may be that the purchaser trades the vehicle with a designated dealer, often the dealer from whom the original vehicle was purchased, or a dealer from among a group of participating dealers. If the purchaser trades the vehicle with other than a designated dealer, if this is a requirement of the agreement, the insurer will not be required to compensate the insured for the negative equity.
  • the requirement that the purchaser must trade with a designated dealer i.e., the dealer from whom the original vehicle was purchased or a dealer from among a group of participating dealers, is a powerful motivation for the purchaser to trade with the designated dealer.
  • the amount of the gap at the time of trade can be a few thousand dollars, which would be lost if the purchaser selected a different dealer. In some instances, relief from the financial burden of the gap may be necessary for the purchaser to be able to trade at the desired time.
  • the insurer can also reduce the gap insurance rate to purchasers and/or increase profitability by charging a fee to vehicle dealers for the right to be included as a participating dealer.
  • the basic structure of the negative insurance policy can be modified or embellished to increase market demand. For example, the policy can provide that at least a part of premiums paid will be refunded to the buyer if the buyer cancels the policy before the end of the predetermined time. The policy can also provide that a portion of the negative equity will be paid on a prorated basis if the purchaser desires to trade the vehicle before the end of the predetermined time.
  • Example 1 Buyer A purchases a $25,000 automobile from Dealer B with a down payment of $1,000 and balance of $24,000 financed over a period of 60 months. At the time of purchase Buyer A also purchases a Negative Equity Insurance policy which provides that the insurer will pay Dealer B the difference between the outstanding loan and trade-in value of the automobile at any time after 36 months from the date of purchase, if Buyer A trades the automobile with Dealer B. Trade-in value is defined as the book value of the automobile at the time of trade less any deductions for excess wear or excess mileage.
  • Buyer A decides that it is time to trade the automobile and returns to Dealer B. All premiums on the Negative Insurance Policy have been paid.
  • the outstanding loan on the automobile is $13,420 and the unadjusted fair market value of the automobile is $10,000.
  • Buyer A has taken good care of the automobile and the mileage is not excessive. Therefore, when Buyer A buys a new automobile from Dealer B at an agreed purchase price, the insurer pays $3,240, the difference between the outstanding loan amount and the unadjusted fair market value. This payment and the value of the automobile is used to pay off the loan on the original automobile, enabling Buyer A to acquire the new automobile without the need to pay any gap or negative equity amount.
  • Dealer B profits from the new trade with the returning buyer. Since some buyers will not trade within a short period after the designated term, or will choose to trade with another dealer, the insurer will profit due to the fact that total premiums from all insured buyers will exceed the total amount paid to the individuals who do avail themselves of the policy provisions. In addition, the insurer may also profit from any fees charged to participating dealers.
  • Example 2 The present invention is also applicable to participation of multiple dealers in a group, enabling a buyer who has purchased a vehicle from one participating dealer to trade the vehicle with another participating dealer without loosing the coverage of the negative equity insurance. For example, a buyer who purchases a vehicle from a participating dealer in one geographical area, e.g., one city, and then moves to another city would be able to trade the vehicle with a participating dealer near his new home. To illustrate, Buyer C purchases an automobile from participating Dealer D in one geographical area, e.g., one city, and then moves to another city would be able to trade the vehicle with a participating dealer near his new home. To illustrate, Buyer C purchases an automobile from participating Dealer D in
  • Unadjusted fair market value is defined as the book value of the automobile at the time of trade less any deductions for excess wear or excess mileage.

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  • Business, Economics & Management (AREA)
  • Engineering & Computer Science (AREA)
  • Accounting & Taxation (AREA)
  • Development Economics (AREA)
  • Economics (AREA)
  • Finance (AREA)
  • Marketing (AREA)
  • Strategic Management (AREA)
  • Technology Law (AREA)
  • Physics & Mathematics (AREA)
  • General Business, Economics & Management (AREA)
  • General Physics & Mathematics (AREA)
  • Theoretical Computer Science (AREA)
  • Financial Or Insurance-Related Operations Such As Payment And Settlement (AREA)

Abstract

Procédé d'indemnisation de l'acheteur d'un véhicule contre une moins-value subie lorsque le véhicule est acheté auprès d'un cessionnaire automobile et repris à l'issue d'une période prédéterminée suivant son achat. Au moment de l'achat du véhicule auprès d'un concessionnaire automobile agréé, un assureur délivre à l'acheteur de la voiture une police assortie de primes. Si l'acheteur s'acquitte des primes exigées pendant la période prédéterminée, l'assureur versera en son nom une indemnité équivalant au montant restant dû sur le véhicule minoré de déductions et de la juste valeur marchande non réajustée du véhicule au moment de sa reprise par un concessionnaire automobile agréé, lequel peut être le concessionnaire automobile qui avait initialement vendu le véhicule ou un concessionnaire automobile différent, en fonction des modalités de la police.
PCT/US2006/029952 2006-07-31 2006-07-31 Assurance sur la moins-value WO2008016350A1 (fr)

Priority Applications (1)

Application Number Priority Date Filing Date Title
PCT/US2006/029952 WO2008016350A1 (fr) 2006-07-31 2006-07-31 Assurance sur la moins-value

Applications Claiming Priority (1)

Application Number Priority Date Filing Date Title
PCT/US2006/029952 WO2008016350A1 (fr) 2006-07-31 2006-07-31 Assurance sur la moins-value

Publications (1)

Publication Number Publication Date
WO2008016350A1 true WO2008016350A1 (fr) 2008-02-07

Family

ID=38997451

Family Applications (1)

Application Number Title Priority Date Filing Date
PCT/US2006/029952 WO2008016350A1 (fr) 2006-07-31 2006-07-31 Assurance sur la moins-value

Country Status (1)

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WO (1) WO2008016350A1 (fr)

Cited By (3)

* Cited by examiner, † Cited by third party
Publication number Priority date Publication date Assignee Title
US7774217B1 (en) 2004-11-19 2010-08-10 Allstate Insurance Company Systems and methods for customizing automobile insurance
US9875508B1 (en) 2004-11-19 2018-01-23 Allstate Insurance Company Systems and methods for customizing insurance
US10282785B1 (en) 2004-11-19 2019-05-07 Allstate Insurance Company Delivery of customized insurance products and services

Citations (4)

* Cited by examiner, † Cited by third party
Publication number Priority date Publication date Assignee Title
US5537315A (en) * 1994-03-23 1996-07-16 Mitcham; Martin K. Method and apparatus for issuing insurance from kiosk
US20020046064A1 (en) * 2000-05-19 2002-04-18 Hector Maury Method and system for furnishing an on-line quote for an insurance product
US20040133456A1 (en) * 2003-06-10 2004-07-08 Mark Nagelvoort Method and apparatus for facilitating sales and management of aftermarket products
US20040243449A1 (en) * 2003-05-30 2004-12-02 Michael Neustadt Automated dealership data extraction and insurance processing system and method

Patent Citations (4)

* Cited by examiner, † Cited by third party
Publication number Priority date Publication date Assignee Title
US5537315A (en) * 1994-03-23 1996-07-16 Mitcham; Martin K. Method and apparatus for issuing insurance from kiosk
US20020046064A1 (en) * 2000-05-19 2002-04-18 Hector Maury Method and system for furnishing an on-line quote for an insurance product
US20040243449A1 (en) * 2003-05-30 2004-12-02 Michael Neustadt Automated dealership data extraction and insurance processing system and method
US20040133456A1 (en) * 2003-06-10 2004-07-08 Mark Nagelvoort Method and apparatus for facilitating sales and management of aftermarket products

Cited By (12)

* Cited by examiner, † Cited by third party
Publication number Priority date Publication date Assignee Title
US7774217B1 (en) 2004-11-19 2010-08-10 Allstate Insurance Company Systems and methods for customizing automobile insurance
US8046246B1 (en) 2004-11-19 2011-10-25 Allstate Insurance Company Processing an application for insurance coverage
US8046244B1 (en) 2004-11-19 2011-10-25 Allstate Insurance Company Systems and methods for customizing insurance
US8219427B1 (en) 2004-11-19 2012-07-10 Allstate Insurance Company Processing an application for insurance coverage
US8219426B1 (en) 2004-11-19 2012-07-10 Allstate Insurance Company Processing an application for insurance coverage
US9875508B1 (en) 2004-11-19 2018-01-23 Allstate Insurance Company Systems and methods for customizing insurance
US10282785B1 (en) 2004-11-19 2019-05-07 Allstate Insurance Company Delivery of customized insurance products and services
US10878506B1 (en) 2004-11-19 2020-12-29 Allstate Insurance Company Insurance product development and maintenance system and method
US11023965B1 (en) 2004-11-19 2021-06-01 Allstate Insurance Company Systems and methods for customizing insurance
US11341579B1 (en) 2004-11-19 2022-05-24 Allstate Insurance Company Processing an application for insurance coverage
US11481844B1 (en) 2004-11-19 2022-10-25 Allstate Insurance Company Insurance product development maintenance system and method
US11854086B1 (en) 2004-11-19 2023-12-26 Allstate Insurance Company Delivery of customized insurance products and services

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