Car dealers are unique businesses for a variety of reasons, and an adverse event can occur at any time.
The inventory on a car lot is highly valuable and vulnerable to the elements. In addition, your product will be frequently driven on public roads by your customers, as well as tested, touched, and manipulated in any number of ways. What’s more, you probably have vehicles that belong to others on your property for purposes of repair or storage.
What Property Risks Do Car Dealers Have?
Car dealers have a variety of property risks that can be mitigated with business insurance.
Like most businesses, car dealers likely have a building and other valuable commercial property that need to be protected with insurance. In addition, you face property risks associated with your inventory and your interaction with the general public.
Your inventory can be damaged in any number of ways, from windstorms and hail to vandalism and customers simply touching and testing the vehicles on your lot. Weather is one of the more serious concerns for your inventory. If one vehicle is damaged in a hailstorm, chances are every vehicle on your lot has sustained damage.
Having the general public on your lot is how you sell your product, and unfortunately a great deal of risk comes with the territory. Customers want to look at the interior and exterior of the vehicles, touch and test the equipment, and go for test-drives. There are an endless number of ways in which the cars on your lot can be damaged by your customers or others.
What Liability Risks Do Car Dealers Have?
Car dealers also face a variety of unique liability risks associated with the following activities that take place at your business and with your product.
- Test-drives: Customers who test-drive your vehicles out on public roads pose a great threat to other drivers and their vehicles. People driving unfamiliar vehicles can be involved in an accident that results in property damage, injury, or death, and you can be held responsible.
- Faulty repairs: If you or your employees cause damage to someone else’s vehicle that is in your possession, or perform a faulty repair that leads to injury or death, you can be held liable.
- Catastrophic events: Fire, smoke, or other catastrophic events can damage customer vehicles in your possession for repairs or service. You could be held liable for property damage to other people’s property that is in your care.
- Product liability: A car with a safety problem or some other type of malfunction can cause property damage or can injure someone. You can be held liable in these cases.
What Does Car Dealer Insurance Cover?
The insurance industry has developed a special set of policies or packaged policies that are designed for car dealers. These policies cover your inventory, service work on non-owned vehicles in your possession, negligent or faulty work on vehicles, liability for vehicles out on the road, and much more.
Car dealers looking to find appropriate business insurance coverage should work with a knowledgeable insurance agent who specializes in their line of work. The right agent can find individual and packaged car dealer insurance policies that will address the various forms of property and liability risk inherent in your business.
The following are some basic business insurance policies that you will likely need, in addition to specialty policies and endorsements tailored to car dealers.
- Commercial general liability (CGL) insurance: This provides broad coverage for bodily injury and property damage caused by you or your employees. CGL insurance also covers claims related to slander, libel, and advertising liability. What’s more, CGL policies cover losses or injuries to a user, buyer, or bystander caused by a defect or malfunction of a product.
- Product liability insurance: In some instances this may also cover the manufacturer or seller of the product for defective design and “failure to warn.”
- Commercial property insurance: This provides protection for your commercial property, including building(s) and contents.
- Business interruption coverage: This provides coverage for lost income and expenses if you must temporarily cease operations after a catastrophic event. It pays employee salaries, rent, and other expenses while you are closed to make repairs.
You will also likely need the following types of coverage, and others, depending on your needs and the specifics of your business:
- Employee dishonesty coverage: This covers employee theft and crime.
- Auto dealer physical damage coverage/dealer’s open lot coverage: This covers your inventory, or vehicles held for sale.
- False pretenses coverage: This protects your business if you are tricked into releasing a vehicle to someone under false pretenses.
- Professional liability/errors and omissions insurance: This is for odometer, truth in lending, and title related claims.
- Garagekeepers liability coverage: This covers customers’ vehicles in your care, custody, and control (e.g., for repairs or service).
- Inland marine coverage: This is for vehicles in transit.
- Workers’ compensation insurance: This is to protect employees who are injured on the job.
What Does Car Dealer Insurance Cost?
Car dealers need a customized mix of property and liability insurance to ensure that there are no gaps in coverage. The cost to cover your car dealership with a comprehensive business insurance program will vary depending on:
- The size of your business
- Your location
- The number of employees you have
- The products and services you provide
- The value of your commercial property, including your building (if you own it) and all of its contents
- The value of your vehicle inventory
- The types of coverage and the coverage limits that you require
- The crime and weather risk in your city
Find and Compare Quotes
An independent insurance agent can work with you one-on-one to determine the types and amounts of coverage you need. Your agent can get quotes from multiple insurance companies so you can evaluate the cost and coverage options and make the best choice.
Benefits of an Independent Agent
Our agents simplify the search process for finding the right car dealer insurance. They’ll walk you through the handpicked policy options and explain the details and options.
Most importantly, they’ll be there for you when claim time comes. They know the ins and outs of the process and will make sure your claim is handled appropriately.
The Lowdown on Online Quotes
Online quotes can be tempting. They are fast and easy to get — but are they accurate? And are you getting quotes for the right coverage? For business owners, choosing speed over accuracy can cost you.
Online quotes can’t and don’t see the whole picture. They can leave out important coverage that will leave you devastated if something unexpected happens. And they can leave out cost-saving opportunities that an agent can help you take advantage of.
Instead of getting an online quote, find an independent insurance agent now, and get one-on-one consultation and affordable options for the best coverage for your unique needs.
TrustedChoice.com Article | Reviewed by Paul Martin
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