Selling used cars can be a rewarding and profitable business, but (like most businesses) it is not without risk. Between maintaining an expensive inventory that is subject to the weather and the liabilities of conducting test drives with customers, it's easy to see why small business insurance protection for your car dealership is so important.
Specialized used car dealership insurance policies are designed to protect dealerships, both large and small, and the vehicles on the lot. Some of the available coverage options include the following.
- Garage Liability: This provides liability protection on your lot as well as when your vehicles are being driven out on the road. Limits of this coverage vary so know what they are and transfer them to a real-life situation. Will they be enough? Usually to raise them is very economical and the time to do it is before there needed.
- Garage Keepers Liability: For dealerships/garages that do repairs/body work on non-owned vehicles, this coverage protects against the possibility of damaging vehicles while temporarily in your possession. Amazing how many small dealerships I see that don't have this, especially when coverage can be purchased for less than $100/yr.
- Uninsured/Underinsured Motorist: Did you know that in some parts of the TriState area (VA, MD, and DC), up to 87% of the vehicles on the road aren't carrying the minimum limits of auto liability insurance? This would provide coverage if one of these vehicles were to cause an accident with you.
- Medical Payments/Personal Injury Protection: This is often called "No-Fault" insurance as it provides a small amount of coverage for the smaller claims/losses and negligence on your part isn't a pre-requisite to coverage. PIP also provides loss of wages coverage so it's a tad more in cost.
- Errors & Omissions: Also known as E&O insurance, this provides protection from mistakes made by your dealership that could negatively impact a customer, such as untruthfulness or failing to disclose vital information about a vehicle (and remember, it's not that whether you did something wrong, it's that your being accused of it and therefore, will usually require an attorney to provide defense).
- Dealers Open Lot: For vehicles owned by your dealership, this provides physical damage coverage in case of hail, vandalism, theft, fire and more.
- Surety Bonds: Dealership bonds are a type of guarantee that your business is operating in compliance with state laws and most states require them.
- False Pretense: In the event that you're scammed or otherwise fooled, this option helps cover associated losses. For instance, a "customer" may claim to be someone they're not and steal a car during a test drive.
- Property: Covers property you own just in case it's destroyed or stolen in case of a fire, tornado, burglary, etc.
- Crime: Every keep any cash locked up or take it to a bank for deposit? Did you know it's not covered under a normal property policy? This provides coverage for it, however, you usually have to request it. Fraud and employee theft would be covered as well.
There are a few other coverage items to look out for that, depending on your specific needs, can also create gaps in coverage. These include Drive Other Car Liability, Dealer Drive Away, etc.
Now, you've checked your coverage once, then twice and all seems to be good. You're covered, right? Well maybe. Be sure and read the endorsements that are on your policy as well. A lot can be discovered and some of it can be downright scary. Did you know there's one that excludes any claim or loss that has to do with repairs you conducted on one of your vehicles? Now if you're like most dealerships, you usually repair one or more items on the vehicles you purchase for sale. These would include tires, brakes, oil and transmission fluids, etc. Under this endorsement, if any of those were to be the cause of an accident, you would not be covered.
There's a lot to know when insuring a dealership correctly which is why it would be prudent to work with one that specializes in them. Trust you independent insurance agents here at TriState Business Insurance to help you sort it all out!