auto dealers insurance

Do Auto Dealers Really Need Insurance? A Closer Look.

Consumers’ intent to buy new and used cars is close to pre-COVID-19 levels. After challenging conditions recently for your auto dealership, you need every possible advantage.

Have you evaluated your dealership’s insurance lately?

Auto dealers have different insurance needs than other businesses. The right insurance coverage can benefit your business in many ways.

Find out more about insurance for auto dealers and how it can help your business.

Insurance Requirements For Auto Dealers

Auto dealers aren’t required to individually insure every vehicle on their lots. However, you need certain types of overall coverage policies.

Like other businesses, auto dealers must carry insurance coverage. You need to cover the business and its assets.

Minimum coverage requirements vary by state. You have other types of optional coverage specific to auto dealerships. Common types of insurance coverage in an auto dealership policy include:

  • General liability
  • Employment Practices Liability Insurance (EPLI)
  • Errors and omissions (E&O)
  • Business income
  • Workers’ compensation
  • Garage Keepers Liability
  • Garage Liability
  • Dealer plate insurance

The right coverage meets the legal requirements in your state and your business needs.

Who Needs Auto Dealer Insurance?

Any business that a state considers “garage-related” must maintain at least the minimum insurance coverage for auto dealers. You’re a garage-related business if you sell any type of motor vehicle. Franchised and non-franchised dealers need auto dealer insurance.

Businesses that repair, detail, or perform maintenance work on vehicles usually fall under the definition.

You get many benefits from an insurance policy specific to the auto industry. Coverage will address issues that other types of coverage may not. Your business gets more comprehensive protection.

Benefits Of Auto Dealer Insurance

Carrying auto dealer insurance has many benefits for your business.

You stay compliant with state law and avoid potential penalties. You protect your employees and customers. You protect your facilities and inventory.

Each type of insurance coverage has specific features and benefits.

General Liability Insurance

Many states require general liability insurance for all businesses. It protects you from incidents including bodily injury and property damage. It covers damage from causes like copyright infringement, reputational harm, or advertising injury.

General liability insurance protects you from incidents that involve people who don’t work for you. It provides help with legal, medical, and other costs that can result from claims. The amount of coverage you get depends on your policy.

The types of claims that general liability insurance covers are quite common. They’re also quite expensive. Protecting your business is essential for your long-term success.

Employment Practices Liability Insurance (EPLI)

EPLI protects your business against employment-related claims. EPLI covers issues like:

  • Harassment
  • Wrongful termination
  • Discrimination
  • Breach of contract
  • Retaliation

EPLI can reimburse your legal expenses as well as the cost of judgments and settlements. It covers claims from employees, former employees, and prospective employees.

EPLI doesn’t cover the types of claims that policies like workers’ compensation cover.

Increased sensitivity to issues like discrimination makes claims that fall under EPLI more and more likely. You probably don’t want to think that your employees would bring a claim against your company.

However, failing to protect your business could leave you exposed to expensive legal costs. Even if you win the case, you lose time and money without the benefit of EPLI.

Errors And Omissions (E&O)

E&O insurance is a specialized form of liability insurance. It protects businesses that give professional advice and perform services for customers.

E&O insurance provides coverage if work was done incorrectly and caused harm to a client. It covers your business if an employee makes an error or leaves something out for a customer as part of your business operations.

Most policies help with legal fees, court costs, judgments, and settlements.

Business Income

Business income insurance is a type of property insurance. It protects you in the event of a natural or man-made disaster.

Business income coverage replaces your lost income while you make repairs to your facilities. It helps cover business expenses like payroll. You can keep your business running during the restoration period.

Workers’ Compensation

Every state except Texas requires employers to have workers’ compensation insurance. You may need coverage even if you only have a single employee. Coverage requirements vary by state.

Worker’s compensation insurance gives you and your employees critical protections. It covers medical expenses and lost wages for employees who become sick or injured on the job. An employee who accepts worker’s compensation benefits gives up the right to file a civil lawsuit against your company.

Garage Keepers Liability

Garage keepers liability provides coverage if a customer’s vehicle is damaged while it’s under your care. It covers the cost of the damage.

Policies typically include damage from fire, vandalism, collision, or weather. Some policies also cover theft if someone steals a customer’s vehicle while it’s in your possession.

Garage keepers liability coverage is especially beneficial if your auto dealership does vehicle maintenance and repairs.

Garage Liability

Garage liability is a type of umbrella policy specific to the automotive industry. It provides coverage for your day-to-day operations.

Garage liability covers bodily injury and property damage from direct garage operations. This type of coverage goes beyond most general business liability insurance. Garage liability typically covers damage like:

  • Third-party injuries
  • Liability claims, like discrimination
  • Employee dishonesty, like stealing a customer’s vehicle
  • Property damage from business-owned equipment
  • Damage to a customer’s vehicle from products you make or sell

A garage liability policy gives your auto dealership important protections for all your garage operations.

Finding The Right Insurance For Your Auto Dealership

Auto dealers need several types of insurance coverage to protect their businesses. You have to meet the insurance requirements for your state. You can also benefit from types of coverage specific to the auto industry.

To find the best coverage at the best price, you need to compare several insurance providers.

This process is easier when you work with Auto Dealers Insurance. We’re an independent agency representing more than a dozen top-rated insurance companies. Our agency has years of experience helping new and used auto dealers.

Contact us today for a free quote. We’ll find a plan that meets your needs and budget.

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