What is Automobile Dealership Insurance?
Automobile dealership insurance is a specialized type of business coverage designed for franchised and independent auto dealers. These policies protect against common risks faced by dealerships, such as property damage, liability claims, and damage to customer vehicles. Because dealerships operate with a mix of owned inventory, customer cars, and high traffic from both employees and customers, a standard business policy typically won’t provide adequate protection.
Who Needs It
This coverage is essential for franchised car dealers, used car dealers, and businesses that offer vehicle repair or maintenance services on-site. Whether you sell new or used vehicles, operate a service garage, or store customer cars, you likely need a tailored insurance policy to manage your risk exposure.
What It Typically Covers
Automobile dealership insurance packages usually combine several types of protection into one policy. Common coverages include:
- Property Insurance: Covers buildings, signage, and business personal property from risks like fire, theft, or vandalism.
- Garage Liability: Protects against liability claims involving customers or third parties injured on the premises or due to operations.
- Garagekeepers Insurance: Covers damage to customers’ vehicles while in your care, custody, or control (e.g., during servicing or test drives).
- Dealers' Physical Damage: Covers physical loss or damage to vehicles held for sale due to collision, fire, theft, etc.
- Business Income Coverage: Helps replace lost income if your operations are interrupted by a covered event.
- Employee Tools Coverage: Protects tools owned by employees but used on your premises.
- Advertising and Personal Injury Liability: Covers claims such as libel, slander, or false advertising.
- Pollution Liability and Storage Tank Coverage: May be added if your operations involve fuel storage or hazardous materials.
Common Exclusions and Limitations
While these policies offer broad protection, certain exclusions often apply. Common limitations may include:
- Wear and tear or mechanical breakdowns
- Intentional acts or criminal activity
- Vehicles not owned or held for sale by the dealership
- Pollution not covered under specific endorsements
It’s important to review each policy carefully and work with a knowledgeable agent to understand your specific coverage limits.
Factors That Influence Cost
Several factors can affect the cost of your dealership insurance, including:
- Size and location of your dealership
- Value and number of vehicles on your lot
- Number of employees and claims history
- Types of vehicles sold (new vs. used)
- Whether you offer test drives or vehicle repairs
Proof of Insurance and Compliance
Most states require auto dealers to carry certain types of liability insurance to maintain a business license. You may also need to provide proof of insurance to lenders, leasing companies, or other business partners. Requirements vary by state, so it’s essential to consult local regulations or a licensed insurance provider.
How to Get a Quote
To find the right coverage for your dealership, compare options from providers experienced in commercial auto and garage insurance. Make sure the policy fits your business type, inventory value, and services offered. Get a quote today to protect your dealership and keep your operations running smoothly.
Frequently Asked Questions
What’s the difference between garage liability and garagekeepers insurance?
Garage liability covers injuries or property damage related to your dealership’s operations, while garagekeepers insurance protects customers’ vehicles left in your care.
Do I need separate coverage for test drives?
Most dealer policies include coverage for test drives, but it’s important to confirm that this is included in your specific plan.
Is employee theft covered under dealership insurance?
Employee theft may not be covered under standard policies, but you can often add a crime or employee dishonesty endorsement.
Can I customize my dealership insurance policy?
Yes, most providers allow you to tailor coverage with endorsements to meet your business’s specific needs.
Does this insurance cover vehicles in transit?
Coverage for vehicles in transit may be included or added as an endorsement. Always verify with your insurer.
Still have questions? Talk to a local insurance expert.