A Minnesota dealership lost a federal lawsuit seeking coverage for more than $490,000 in hail damage to 60 imported used vehicles that were awaiting compliance work at a Michigan processing facility, Automotive News reported. A judge ruled the vehicles were not covered under the dealer’s transit policy when a July 2023 hailstorm struck.
The dispute turned on whether the vehicles were still in transit or had moved into a separate storage or processing status after arriving at the Michigan facility. The court found the policy did not extend coverage to vehicles sitting at the facility awaiting work needed to bring them into compliance for U.S. sale, according to Automotive News.
For dealers, the ruling highlights a coverage gap that can emerge when inventory is off-site at ports, processors, auction locations, upfitters or reconditioning vendors. Operators importing vehicles or moving used units through third-party facilities should review when transit coverage begins and ends, and whether separate physical damage, open-lot or bailee coverage applies while vehicles are parked and awaiting work.
Dealers should keep an eye on policy language tied to off-site storage and processing, especially as weather-related damage claims continue to test the boundaries between transit and inventory coverage.