Illinois Used Car Dealer Recovery Trust Fund Illinois Public Act 97 0480
SUNDAY, NOVEMBER 20, 2011by Aya Musa, Illinois Car Insurance Expert
According to experts handling Illinois used car dealerships there were over 11,000 used car dealers in the State of Illinois by the end of 2009. This number fell to little over 6,000 dealers by the the last quarter of 2011. Experts project 15% to 20% decline in the number of used car dealers in Illinois in the next year of 2012. Many of these Illinois used car dealerships that have closed and failed to pay off vehicles traded in to the dealership by consumers have resulted in innocent consumers become financially liable for two car loans.
Also, some of these closed dealerships have sold vehicles with an undisclosed lien, a procedure that caused both consumers and car dealerships having possession of an auto they paid for, but being unable to drive the vehicle, title it or even dispose it. According to sources there are at least 60 dealerships that have shut down and left a mess like that behind. Illinois House Bill 880 which become a Public Act 97-0480 effective 10/01/2011 aimed at amending the Illinois Vehicle Code. The Act provides that each and every used car dealership applying for new or renewal of vehicle dealer’s license must pay additional $500.00 as an Annual Dealer Recovery Fund Fee. The fee is payable to the Illinois Dealer Recovery Trust Fund, an account that is does not belong to the State of Illinois. The account will be managed by persons appointed by the Dealer Recovery Trust Fund Board.
Remedies for The Problem
Some of the solutions for the above problem may be found in the insurance coverages provided by insurance companies. Many insurers that offer a Business Owner Policy for (BOP) may include a list of coverages that address problems similar to errors made by dealerships, defective titles, and others. Companies offering BOP may not really charge any extra for the following coverages:
E & O Coverages For Used Car Dealers: This coverage will pay for losses resulting from certain errors and omission made by dealers. Errors made by dealers must be related to the operations of the dealership may include:
- Truth in Lending or Leasing Liability
- Federal Odometer Liability
- Prior Damage Disclosure Liability
- Title Errors and Omissions
A BOP policy is the best insurance form available for businesses where more coverages are offered either at no or little extra charge. Companies offering BOP for car dealerships do normally have stringent underwriting guidlines.
Also, a dealer bonds may help. Illinois requires used car dealerships new ventures to maintain a $20,000 used car dealership bond. Used car dealer bonds are mandatory from new ventures of used car dealerships for up to three years, in order to insure that the dealership is adhering to the laws of the State of Illinois related to running the used car business. The cost of the bond in Illinois is about $200 per year for a dealership with good credit.
The State of Illinois has decided to use a special trust fund because, it says, a bond requirement has a guaranteed annual expense. Also, a bond has an exposure limit and expires if not used. In other words, the bond is more expensive, according to the State of Illinois. The State of Illinois, for that reason, decided to establish a trust account as the most effective method to deal with the problem associated with used car dealers closings. A trust fund, according to the enacted House Bill 880, has a lower annual expense, besides that fact that all money collected and not used would stay an element of that trust fund.