Floor Plan Insurance Definition

For example automobile dealerships utilize floor plan financing to run their businesses.

Floor plan insurance definition. Although floor plan insurance is used quite frequently many underwriters and agents do not completely understand how it works this article will explain the basic concept of floor plan insurance and describe several situations in which it is commonly used. Retail floor planning also referred to as floorplanning or inventory financing is a type of short term loan used by retailers to purchase high cost inventory such as automobiles these loans are often secured by the inventory purchased as collateral. Insurance that covers goods meant for sale that are in the possession of a retailer and have been accepted as collateral for a loan. The inventory can include cars trucks recreational vehicles motorcycles equipment and manufactured housing dealers.

Floor planning is a form of financing for large ticket items displayed on showroom floors. Floor plan insurance definition insurance that covers goods meant for sale that are in the possession of a retailer and have been accepted as collateral for a loan. To understand the various applications of floor plan insurance agents must be familiar with its components. If the goods are damaged or destroyed the lender is covered.

Floor planning is commonly used in new and used car dealerships.