Automobile Dealerships and Consumer Fraud.
AUTOMOBILE DEALERSHIPS AND CONSUMER FRAUD
Prior to instituting suit against an automobile dealership for consumer fraud or breach of warranty, it is necessary to understand the nature and extent of the insurance provided for the dealerships for this type of conduct. Initially, there are two primary insurance companies that provide this type of coverage. The largest one is Universal Underwriters which is now owned by Zurich. As a matter of public policy, punitive damages, triple damages and consumer fraud are not covered within the provisions of these polices. Generally, the policies provide for payment of a lawyer to defend the claim. At such a time, if there is a jury verdict or settlement, it generally will be the obligation of the dealership. Any settlement would be paid by the dealership. However, there are various allegations that the selling dealership would be covered for under their policy of insurance. Each policy is different and has to be reviewed, however, generally, Truth in Lending violations and negligence are almost always covered as a matter of course. A negligence allegation would be that the dealership failed to act in a reasonable manner pursuant to their relationship with the customer. Truth in Lending violations are statutory violations and are a violation of the Federal Truth in Lending Act.
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