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What Is Auto Dealer Insurance and Do I Need It?

Did you know that are about 16,658 used car dealerships in the US? In 2021, they sold about 8.3 million used cars and more than 136 million repair orders.

As a used auto dealership, your inventory of used cars is your business. If something unexpected were to happen to your inventory, it could lead to financial insolvency. That’s where auto dealer insurance comes into play.

If you are wondering how auto dealer insurance can work for you, you’ve come to the right place. Keep on reading for your ultimate guide to auto dealer insurance and whether you need it.

Why Do You Need Auto Dealer Insurance?

Auto dealer insurance covers used car dealerships for circumstances beyond their control. If someone breaks into your warehouse and steals your cars, trucks, or RVs, you can end up with significant financial losses. In tight economic markets, it can affect your bottom line and even lead to bankruptcy.

If there’s a fire in your showroom, then you can lose all of your inventory and equipment. You will also have to deal with added costs of paying your employees and debts even if your business is interrupted. Like any other business, you will also have to deal with third-party claims for normal slip-and-fall litigation.

You can also be sued by your employees if they feel they have been wrongfully terminated or discriminated against. Customers can sue you if the used car they purchased is not up to their standards. They can even claim fraud, misrepresentation, or negligence.

Who Does Auto Dealer Insurance Cover?

Auto dealers insurance covers various dealerships, including franchised and non-franchised used auto dealers. 

Truck and trailer dealerships should also consider auto dealer insurance because they have the same risks for their inventory and property if it gets damaged from fire, floods, or other natural disasters.

Auto dealer insurance also covers RV dealerships. A basic used RV can cost around $40,000. With more upgrades and fancier RVs, you can have a lot of expensive inventory that can be at risk from unexpected events.

What Commercial Auto Policies Should You Consider?

There are different types of auto deal insurance policies that you can consider getting. The level of coverage depends on your risks and security measures in place. Talk to your insurance company to understand what works best for you.

General Liability Insurance

General liability insurance is the basic coverage for most businesses including car dealerships. General liability insurance protects you from third-party claims. For example, if clients or delivery people slip and fall while on your premises. You can get sued for their medical costs, and deal with legal costs and settlements.

This insurance also covers you for third-party claims for property damage. If there’s a fire at your place and your neighbor’s property is damaged, you’ll be covered for their financial losses.

Commercial Property Insurance

If your assets, including equipment, building, and inventory get damaged in a fire, flood, or other natural disasters, you can be covered under commercial property insurance. It can also cover you if your property gets stolen or vandalized. Consider where you’re located as this can increase your risk for theft or vandalism.

New Vehicle Sales

If a customer isn’t satisfied with their car, they can sue you. Even if you’re in the right, you still have to deal with legal costs and settlement fees. New vehicle sales coverage can protect you in those circumstances.

Warranty of Repair Work

A used car dealership also repairs cars. If your employee makes a mistake that leads to a malfunction, you can be sued for additional repair costs, medical costs, or any other financial losses. Warranty of repair work can cover you for those financial losses.

Business Interruption Insurance

Where there’s fire, flood, or other natural disasters, you will be dealing with more than property damage. You will have to deal with additional costs of having your business interrupted including lost revenue, paying bills, and salaries.

You may even need to open a temporary office elsewhere or relocate for a period while your building is being repaired. Business interruption insurance can help you cover those additional costs.

Other Coverage

Other coverages include employment practice liability, which will protect you if your employees bring a claim against you for wrongful termination, discrimination, or harassment. You can also get professional liability or errors and omissions insurance. This will cover you if you get sued by your client for providing faulty advice.

If you’re keeping your customer’s car at your warehouse for repairs or temporary storage, you can get garage keepers liability insurance. Garage keepers liability insurance will cover you for any damage to your customer’s car while in your care.

What Should You Look For In Your Insurance Company?

You need an insurance company with experience working with auto dealers. There are risks that are specific to a car dealership and your insurance company should be aware of those. If not, you can end up with premiums that are too high and not customized for your business.

You also want a company with top customer service. They should explain the details of your policy including any exclusions or restrictions. There should not be any surprises when you have to deal with a claim.

Your insurance company should also be available 24/7 because unexpected events can happen at any time.

You should also compare rates from multiple insurance companies to find the best rate. As auto dealer insurance is customizable, premiums can vary across different companies.

Contact Your Auto Dealer Insurance Experts Today

Now you know all the benefits of auto dealer insurance and why you should get coverage. You also understand the different types of coverages that you can get to protect your business. Your business is at risk from third-party claims, employment practices, and business interruption during unexpected events.

If you’re looking for auto dealer insurance, request a free quote today. We are an independent insurance company that can compare auto dealers insurance at multiple companies to find the best deal for you.

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