What is Property/Franchised New Auto Dealers?
Property/Franchised New Auto Dealers insurance is a commercial insurance package tailored for franchised new-car dealerships. It combines property coverage for buildings and inventory with garage and commercial auto exposures tied to sales, service, and test drives. Policies are designed to address risks like premises liability, damage to new-vehicle inventory, equipment coverage for service bays, and business interruption following a covered loss.
Given the unique risks associated with dealership operations, having comprehensive insurance coverage not only safeguards the dealership assets but also ensures compliance with contractual obligations often required by manufacturers and financial institutions.
Who needs it
This coverage is commonly purchased by franchised dealerships and their affiliated service centers, parts departments, and lot operators. Smaller independent storefront dealers often need different program structures—compare options like the New Car Franchised Auto Dealers Insurance Program when you operate as an authorized franchise. Dealerships that offer courtesy drives, loaner vehicles, or off-site events should carefully consider commercial auto exposure and garage liability.
What it typically covers
Typical components include:
- Property coverage — buildings, lot improvements, and inventory (new vehicles and parts)
- Garage liability — bodily injury and property damage arising from dealership operations
- Commercial auto — coverage for dealer-owned and customer test-drive vehicles
- Equipment breakdown — service lifts, diagnostic machines, and refrigeration
- Business interruption and extra expense — helps replace income after a covered physical loss
Some programs also offer participant accident coverage for test drives or customer demonstrations and tailored risk management services for lot security and fleet safety.
Common exclusions or limitations
Most policies exclude intentional acts, wear-and-tear, certain flood or earthquake losses unless added by endorsement, and liabilities arising from contractually assumed obligations. Coverage limits for high-value inventory or specialty equipment may be restricted without scheduled coverage. Garage operations with altered business models (for example, extensive off-site sales or large auction activities) can face different underwriting requirements.
Factors that influence cost
Underwriting factors include location and crime rates, annual sales volume, number of vehicles on the lot, claims history, safety controls (alarm systems, sprinkler protection), and the mix of services offered (repair, body shop, rentals). Operational hazards such as frequent test drives or vehicle transport increase exposure. Effective risk management programs and documented loss-prevention measures can lower premiums.
Proof of insurance & compliance
Dealers often need certificates of insurance to satisfy franchisors, lenders, or lessors. Lenders may require specific property and inventory limits and additional insured endorsements. Make sure your policy lists required entities and shows appropriate limits for compliance and lienholder interests.
How to get a quote
To compare program features and limits, speak with a broker or program underwriter experienced in auto-dealer exposures—resources such as the Colonial General Insurance Agency, Inc. - Auto Dealers Insurance Program or dealer-focused garage programs like Garage Dealers and Non-Dealers Insurance can help identify appropriate coverages. If you prefer to get started right away, talk to your agent to request quotes, discuss limits, and review endorsements that match your dealership’s operations.
Frequently Asked Questions
Do new-car dealerships need separate garage liability and property policies?
Many dealerships purchase a package that combines property and garage liability components, but endorsements or separate policies may be needed for large inventories, specialty equipment, or extensive commercial auto fleets.
Will insurance cover customer vehicles left for service?
Most garage liability and bailee’s customer coverage protect customer vehicles left in your care, custody, or control, but limits and exclusions vary—confirm the bailee’s coverage and any required deductibles.
How often should a dealer review coverage limits?
Review limits annually or when inventory levels, services offered, or property values change to ensure adequate protection and lender compliance.
Still have questions? Talk to a local insurance expert.