This article was produced in partnership with Amwins.
As auto dealerships look farther afield to source scarce inventory, a troubling trend has emerged: vehicles are being stolen while in transit.
Criminals are exploiting weak points in the transport chain, using fake paperwork, impersonation schemes, and even cloned websites to intercept cars before they reach dealers or customers.
The problem has become so common that DealerGuard, Amwins Program Underwriters’ dealers’ open lot program, is warning dealerships and agents to take notice.
Matt Cermak (pictured on the left), senior vice president and program manager at DealerGuard, told Insurance Business that the managing general agent (MGA) has paid close to a dozen claims from stolen vehicles in the last year.
“We hear it from other insurance programs and carriers, and we see it on other loss runs regularly, too,” Cermak said. “It is what we would consider a loss epidemic.”
Traditionally, auto dealers bought inventory through auctions or directly from manufacturers. However, supply shortages and higher vehicle values have pushed many to source cars through channels such as individual retail customers, smaller auctions, and brokers.
The COVID-19 pandemic further disrupted vehicle supply chains, driving up prices by 25–30% and making exotic and specialty models even harder to source.
That scarcity, combined with arbitrage opportunities across states, has prompted more dealers to transport cars over long distances, often through third-party services. According to John Taggart (pictured on the right), senior vice president at DealerGuard, this has created new exposures.
“Dealers are increasingly relying on logistics providers they don’t know and haven’t vetted. They go onto a platform, hire whoever’s available, and that’s where many thefts originate,” Taggart said.
These platforms, while efficient, have become a magnet for fraud. The DealerGuard experts noted thieves pose as legitimate transporters, hijack shipments, or manipulate delivery instructions.
“One of the most elaborate schemes we’ve seen involved a mirrored version of Central Dispatch’s website,” said Cermak. “The site was cloned, and driver instructions were changed. The driver followed them and unknowingly gave the vehicle away.”
Other scams are simpler but no less effective, such as altering drop-off points, hacking auction platforms to obtain gate passes, or arriving ahead of legitimate shippers with forged credentials.
Taggart added that rising vehicle values and advances in technology are giving thieves more incentive and providing them with more tools.
“We don’t see thefts declining anytime soon,” he said. “Platforms are trying to tighten controls, but thieves are exploiting vulnerabilities faster than the fixes arrive.”
For dealerships, the financial consequences of auto theft during transport are severe.
“Most of these claims involve cars worth between $50,000 and $500,000,” said Cermak. “Even one claim can damage a dealer’s loss ratio and lead to higher premiums or deductibles for years. Multiple thefts can make it extremely difficult to secure coverage at all.”
Dealers’ open lot physical damage policies typically respond, treating these cases as theft. Some carriers classify them as theft by “trick and device,” while others fall under standard theft. Either way, claims are generally paid, but not without friction.
Ambiguities in wording, high deductibles, and the growing use of escalating theft deductibles (e.g. $5,000 for the first theft, rising to $20,000 for subsequent ones) all make coverage more complex.
The scarcity of vehicles, higher values, and reliance on non-traditional supply and transportation chains are driving increased exposure for auto dealers. For some accounts, repeated losses could jeopardize their coverage.
“When each loss is $250,000, the carrier may only offer terms with a huge deductible. At that point, it borders on uninsurable,” warned Taggart.
Finally, the reputational impact of multiple thefts is harder to quantify but significant. Customers whose vehicles disappear mid-shipment lose trust, even if the dealer ultimately makes them whole.
With transit thefts unlikely to disappear, DealerGuard is urging dealers and their insurance agents to be more vigilant and to:
DealerGuard itself is stepping up efforts. The firm is issuing loss control bulletins, updating policy forms, and using claims as teaching tools. For larger losses, the program administrator is sending consultants to dealerships to recommend mitigation measures.
“We want awareness built into every stage of the policy lifecycle,” Taggart said.
Learn more about DealerGuard here.
