It’s Time to Stop the Double Standards in Our Industry

Dear ARA Members,

We hope this letter finds you well. Considering the rapidly changing landscape of our industry, it has become increasingly apparent that our sector must resolve a critical issue that affects all of us — the rising costs associated with storing and protecting units for free, as well as the double standard our sector faces when dealing with Acts of God as compared to auction houses.

Agents are currently expected to provide coverage for any damage incurred, regardless of fault, to units stored on their lots. When direct primary coverage was established many years ago, it was with the understanding that storage fees would be the bridge for agents to provide this expensive coverage. However, in the current business environment where storage fees are no longer being paid, it is imperative that the agent network demand a change in the way business is conducted regarding storage.

Lenders must come to expect that storage fees will be a necessary part of doing business. They must also understand that the inclusion of direct primary coverage is coming to an end. There have been many incidents in which agents have lost their insurance policies due to vehicles being destroyed by hurricanes, tornadoes, and other acts of God. The current situation is unsustainable and unfair to our members who bear the brunt of these losses. In the wake of the recent hurricane that struck the Houston, Texas area, several units that were being stored for free on the lots of our members sustained catastrophic damage.

We cannot continue to hold our breath each time a storm passes over, where our businesses are being gambled with no revenue generated to cover the services being provided. It is imperative that we discuss this issue in order to correct this unfair situation. The auction community does not carry the risk when an act of God occurs with a unit stored at their location — neither should our agents.

It's Time to Stop the Double Standards in Our Industry — Click to enlarge

Additionally, when transporters damage vehicles while they are in our possession, we face significant risks. In Angleton, Texas, a recent incident serves as a revealing example. One of our members observed a transporter using rocks, hammers, and plumbing pliers to gain access to a unit. Having caused substantial damage to the vehicle, the transporter left, and the agent contacted the bank, which had previously prohibited him from cutting the key. As soon as the photos of the damage were submitted, the bank changed its position. Please see the attached photo to see the extent to which this transporter went to gain access to this unit.

This is truly shocking. Lenders must allow any agent who has the ability to perform locksmith services to provide the key to the unit. This aids in the release of these units and minimizes unnecessary damage.

We must unite and advocate for fair compensation for the services we provide and the risks we assume. We urge you to join us in demanding that lenders and other stakeholders recognize the necessity of paying storage fees or remove the financial burden the agent network faces with maintaining direct primary coverage for free.

Our industry can benefit from a more equitable and sustainable environment if we work together.

Thank you for your continued support and dedication to the ARA.

Vaughn Clemmons