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Dealership Car Insurance

If you’re wondering how car dealerships handle their own car insurance or are looking to open up a lot yourself, then this is the post for you as we look at what kind of car insurance a car dealership will have to get in order to both operate and protect their assets. Fortunately, dealerships don’t have to get an individual insurance policy for each of the cars they are selling. Instead, they have to opt for more commercial-oriented car insurance designed for entire fleets. Car dealerships also should carry all the necessary insurance, which protects their business and employees as well. We’ll look at the types of insurance, how much coverage is needed, and how much it costs for businesses like a car dealership.

Are There Insurance Requirements For Auto Dealers?

Because there are state-specific insurance requirements for all cars with a registered license plate, car dealerships have auto insurance requirements for the ones they are selling as well. Car dealership insurance is an interesting case because it’s not the conventional commercial auto insurance that businesses use to insure their vehicles. Dealers often use commercial fleet policies to protect their cars before they are sold. For example, a customer may test drive before they buy, and if they were to get into an accident, a commercial policy would cover the damages. At the same time, general liability coverage is also provided by commercial auto insurance.

How is Commercial Car Insurance Different From Personal?

The bare minimum legal driving requirement in each state is the minimal amount of liability automobile insurance required, and almost every state requires all cars to have basic liability vehicle insurance. This insurance protects drivers in the case of an accident. However, once a driver is using their car for work purposes, their personal policy doesn’t cover any damage that occurs while they are on the job. For those instances, the driver will need commercial car insurance.

What is The Specific Commercial Insurance Dealers Get?

Now, let’s look into what specific kind of commercial coverages car dealers get for the cars on their lot, along with their business as a whole. Each one plays a role in insuring different aspects of the dealership.

Dealerships need the following commercial insurance:

  • Commercial liability - General liability commercial coverage will insure you against any injuries involving a customer while on the premises. In this case, it’s the car lot. This also protects against libel, copyright, and slander suits. Medical payments are also covered.
  • Employment practices liability - This insures the business when employee issues arise like harassment, wrongful termination, and discrimination.
  • Errors and omissions - This provides coverage to businesses when they are performing a service. In a car dealership context, this is when representatives are giving recommendations to buyers that influence their purchase.
  • Business interruption - If a natural disaster was to strike your business, business interruption insurance would come in to cover the damages. It will also cover other lost expenses and income like payroll and operating expenses for the time being.
  • Worker’s compensation - No business is complete without worker’s compensation, wherein all employees’ medical expenses are covered if they are injured on the job. Yes, even car dealers need worker’s compensation.
  • Garage liability - This commercial liability insurance is reserved for businesses that operate out of a garage. Property damage and liability expenses are all covered.
  • Garage keeper liability - This insures a customer’s car while they are in a dealer service shop’s care. The new cost of damage is covered along with comprehensive hazards like weather and criminal damage like theft.
  • Dealer plate insurance - When a customer takes a car from the dealership on a test drive, its plate is still registered with the dealership as the owner. Dealer plate coverage provides auto insurance to this car and driver while it is being test-driven.

What Kind of Vehicle Dealerships Need This Insurance?

This is the perfect time to talk about garage-related businesses and the insurance they should get. This doesn’t just include car dealerships but also dealers of motorcycles, trailers, and farming equipment. Auto shops that regularly service cars also make the list. Car dealer insurance goes a long way for these businesses.

What States Have Dealership Insurance Requirements?

Auto dealers in the majority of states don’t have to get all the dealership coverage we just went over. However, Kentucky, Louisiana, Nebraska, and New Mexico all require dealerships to carry worker’s compensation. Garage liability insurance is required in all the mentioned states except Nebraska. Meanwhile, general liability commercial insurance is required in Kentucky and Nebraska. But don’t let your state’s laws determine whether or not you should get all the dealership coverages.

If you have any of the following, then it is a good idea to more auto dealership insurance:

  • Cars in your care for maintenance
  • Loaned vehicles
  • Inventory cars
  • Brand-new cars that will be added to the inventory
  • Customers can drive your vehicles and cause an accident
  • Employees can drive customer vehicles and cause an accident

What is The Cost of Coverage For an Auto Dealer?

Because insurance premiums vary depending on a variety of criteria, we can’t tell you how much they’ll cost you. Your premiums will be determined by the amount and sort of coverage you want. The greater your policy’s limit, the more costly it is to provide that protection. Naturally, business insurance costs more than personal insurance. But there are still ways you reduce the cost by asking what business discounts you qualify for.

Some of the most basic factors of your business that determine how much you will pay for a commercial policy are:

  • Location of dealership - Your zipcode is always looked at in the insurance underwriting process. If you live in an area prone to more crime or are the only dealership in town, you may see it reflected in your rates.
  • Dealership size - The more cars and products you have, the more you will pay for your car insurance coverage.
  • Number of employees - This is the case for all types of business; your worker’s compensation cost will be based on how many employees your dealership has.
  • Types of coverage - The more commercial coverage types you get, the more you will naturally be paying for them.

What Can You do to Lower Your Commercial Coverage Cost?

Car dealerships are usually not eligible for the typical personal automobile insurance discounts.

But here are things that you can do to lower your dealership insurance costs:

  • Background check employees - Give the insurance company a better idea of the risk that comes with insuring your workforce.
  • Mandatory employee training - You may get a discount if you show that you put your employees through the same training according to your design as it shows they are equally versed in their jobs.
  • Have a test drive route - Having a designated test drive route for your inventory cars can help keep insurance risks and rates affordable.
  • Check customer driving history - Doing this makes you lower risk in the eyes of the insurance company because you are making sure your customers are low risk.
  • Property security - Much like how car insurance providers give discounts for safety features on vehicles, your commercial insurance provider gives discounts based on the security measures of your business property.

Get a free auto insurance quote online or call Insurance Navy at 888-949-6289 today to speak with an insurance expert. We’ll get you driving insured in no time!

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