In the United States, there are as many as 18,000 new car dealerships and over 142,000 used car dealerships. The auto business can be lucrative, but you should never operate without auto dealers insurance.
As with any business, things can and do go wrong in the auto industry. Car dealers who protect themselves with the proper insurance are ahead of the game. Read on to find out more about car dealership insurance and what kind of coverage you need.
Do I Need Auto Dealers Insurance?
A lot of business owners look at insurance as an unnecessary added cost. You may not need to file an insurance claim every month. But when you do, you’ll be glad you have car dealership insurance.
Circumstances that are beyond our control can occur at any moment. High winds can blow branches into windows, thieves can steal cars, and fires can cause extensive damage to your property. Without insurance coverage, your business is exposed to significant risk.
What Types of Auto Dealers Insurance Do I Need?
The coverage types and amounts you’ll need will depend on the specifics surrounding your business. These can include factors like your location, the types of autos you sell, and how many.
Below is a guide to the different insurance options you have and how they can protect you.
General Liability
Commercial General Liability (CGL) insurance protects your dealership from risks for which you may be liable. Incidents where a third party is injured on your lot, or their property is damaged, can be covered by CGL.
They can also cover advertising injury claims. This includes copyright infringement, false advertising, libel, and slander.
If you own a small business, a business owner’s policy will usually combine general liability coverage with commercial property damage coverage. Bundling these two can save you money in the long run.
Property Insurance
Commercial Property Insurance (CPI) can cover damages to your physical property. This includes buildings, signage, equipment, and inventory. If someone steals property from your dealership, your CPI can cover any losses you accrue.
It will also protect you if your property, or items on it, are damaged by vandalism or fire.
Errors & Omissions
Often referred to simply as E&O, errors & omissions is a kind of liability insurance. It protects businesses and their employees if someone makes a claim related to negligence or inadequate work.
E&O is a specialized type of coverage that protects professionals who provide advice as a consultant, financial advisor, lawyer, or insurance agent.
Why E&O for Car Dealers?
Auto dealers are exposed to many statutory claims. These are related to specific rules, including truth in lending/leasing, lemon laws, federal odometer statutes, and more. Errors & omissions insurance covers losses related to your legal defense and any relevant settlement costs.
Cyber Liability
Believe it or not, car dealerships are prime targets for cybercriminals. Running the business requires obtaining and keeping sensitive information. Your cyber liability insurance plan can protect you from losses associated with the software and hardware you use to manage this sensitive data.
A good cyber liability plan covers losses related to extortion, data theft and/or destruction, loss of business income, data security breaches, DDoS, and firewall or network security attacks.
This type of coverage is crucial in that it not only protects you but can help pay loss claims when customers’ sensitive data is compromised.
Business Income
Sometimes, something happens that prohibits your business from generating income. Your business income policy can pay out for income losses up to the policy limit. Several perils will be covered, such as fire, wind, and theft, but not every policy covers every peril.
Make sure you know what is and isn’t covered by your BI.
Garage Liability Insurance
Garage liability insurance is like a combination of commercial auto insurance and your commercial general liability insurance. It covers accidents that can occur during garage operations. It covers vehicles that are in maintenance as well as in storage and protects against losses like bodily injury and property damage.
Workers’ Compensation
49 out of 50 states require workers’ compensation insurance for auto dealerships. Without insurance, some workers’ comp claims can bankrupt a business.
If someone is injured on the job, your workers’ compensation insurance can cover you for losses related to the injured employee’s lost wages and medical bills. Some examples include paying for medical bills, hospital visits, physical therapy, and prescriptions.
Garagekeepers’ Liability
When you have a business that keeps vehicles in your care, garagekeepers’ liability can protect them. Covered losses often include vehicles damaged because of vandalism, theft, fire, and collisions. Garagekeepers’ liability insurance isn’t just relegated to auto dealerships.
Anyone who keeps vehicles on their property, including mechanics, parking lots, service stations, and storage facilities need this coverage.
Dealer Plate Insurance
Imagine being out on a test drive with a potential customer, and the person behind you rear-ends the car you’re in. What do you do?
If something happens to a vehicle while it is being test-driven by a customer, dealer plate insurance can protect you. It covers the driver, any passengers, and sometimes third parties.
Employment Practices Liability Insurance
Employment practices liability insurance, or EPLI, protects you regarding your employment practices. These can commonly take the form of harassment suits. Additionally, they include discrimination, breach of contract, wrongful termination, and retaliation.
Policies like this are great for large dealerships with a lot of employees. However, even those who operate smaller dealerships can benefit from EPLI protection. As long as you have employees other than yourself, you run the risk of lawsuits.
What Is the Best Auto Dealers Insurance?
All of the aforementioned types of coverage are necessary to keep your business and assets protected. The best auto dealers insurance is going to depend on many things. They include your location, the types of threats your particular dealership faces, and more.
If you’d like to know more about how auto dealers insurance can benefit your business, or to get a quote, contact us today.