All-inclusive About Used Car Dealer Insurance In 2020

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No business is actually easy to operate, but running an auto dealership has a lot of risks you should be careful about.

A used car dealership’s salesperson may be taking a potential buyer around the lot, and an incident may occur.

It could be that there’s an oil spill on the floor, and it slips either the buyer or the salesperson, hence leading to an incident.

What about natural disasters that are quite unpredictable?

What if a landslide occurs, or any other natural disaster and your dealership lot (which contained used cars) are among the affected area?

The truth is, there are a lot of things (both natural and humanmade) that can happen, and the result may affect your business adversely.

There are different types of insurance a business owner can purchase; however, this article will focus on used car dealer insurance policies.

Hence, it is advisable to buy insurance coverage for your used car dealership business. You will want to read how mechanical breakdown insurance works.

Nevertheless, every business has its own risks (not just dealership businesses).

A business owner will solely take care of all expenses that may result from a hazard, fraud, or mistakes if the business is not insured.

Obtaining an insurance policy to cover some aspect of your business helps to curb certain expenses.

Note: any auto dealership can generally purchase these policies, whether new car dealerships or used car dealerships.

Used Car Dealer Insurance

Before applying to get your used car dealership business insured against certain mayhem, you should make proper research on which insurance company will offer the best deal.

However, not all top insurance companies provide auto dealership policies, but you can find a couple of them that do provide such coverage.

It is also important that you among the several factors that can affect the cost of getting your dealership business insured.

Of course, the bigger the dealership, the costlier it may be to get insurance coverage.

There are various types of dealership insurance packages; each offers coverage for specific circumstances; thus, you may need to buy three (3) or more policies to ensure that an insurance company protects a very good part of your business.

Do I Need Used Car Dealership Insurance

Regardless of your dealership size or whether you’re operating an auto showroom, protecting your business should be among your top priorities. ‘

No doubt, insuring a business can be very expensive, and some business owners don’t necessarily see the need for this, since they can run their businesses carefully.

However, it actually not about how careful you can be in running your business; natural hazards can occur at any time and cause severe damages to your goods (in this case, the unsold used cars parked in your lot). 

The truth remains that getting insured comes with long-term benefits and saves you from liability costs that may claim a huge capital from your business savings, thereby leaving you in a deep financial mess.

Most times, it becomes somewhat difficult to continue with the business because there is capital left to carter for the business needs and keep up with competitions.

Asides natural disasters, car theft, is among the biggest risks faced by auto dealerships.

A thief may disguise as a potential buyer, make his way into your lot and drive off with a vehicle (probably while test driving).

Fire disasters are another big problem faced by auto dealers, and in some states, you need to get insured before running an auto business.

Also, since there are quite various types of auto insurance, you can buy a few policies to cover the most critical problems that can cost you a lot of money.

These critical problems can include natural/humanmade disasters, employee welfare (this is a must in some states), problems associated with test driving of unregistered cars, and other aspects you think to require insurance coverage.

The same auto dealership insurance for used car dealerships can also apply to used truck dealers, auto detailing shops, and other auto dealerships.

In the next section, you will learn the various factors that can affect used car dealership insurance, as well as learn the different types of insurance policies available for used car dealerships.

Factors That Affect Used Car Dealership Insurance Costs

1. Size of the dealership

This applies to the landmass your dealership lot covers. Obviously, if your dealership covers more sq.ft.

It means there’d be more cars parked in your lot; hence, the cost of getting insurance will be commensurably higher than the cost of insuring a dealership with less landmass.

The dealership size is one of the main contributing factors to the cost of getting auto dealer insurance.

2. Location of the dealership

The state and location where your dealership is operating from, can also affect the cost of getting insurance.

Different states have different laws on how businesses should be operated within their jurisdiction.

Hence, it is advisable to go with an auto insurance company that operates in the same state where you run the dealership business; this can save some cost (though not foolproof).

3. The coverage/policy you are going to buy

That is it! Auto dealers insurance is available in different types, offering different policies and coverage.

coverage policy
coverage policy

The cost of insuring your dealership business differs from the policy you’re going to buy.

Obtaining protection incidents that may occur in your lot/garage will cost differently to obtaining protection for other people’s cars that may be parked in your lot for one reason or another.

Also, some policies have add-on packages to extend coverage – these added packages will incur additional cost to the policy’s initial price.

Ensure that you discuss with the company and get to understand what is covered in their different policies.

It is also advisable to check other insurance companies that offer the same policy and see what’s included and then compare the two.

These are some of the known possible factors that can affect the cost of insuring a dealership. There may be other considerations, too.

Used Car Dealer Insurance Requirements

Also, different auto insurance companies can ask for different requirements or documents before offering a policy to cover your dealership business.

There are literally no specific requirements for getting auto dealer insurance coverage; you need to communicate with the insurance company’s representative to know the documents you need to present.

Your state may influence the documents you need to submit to the auto insurance company.

How To Find Auto Dealer Insurance Companies

The internet is there to help out; you can start by looking up these keywords “used car dealer insurance Texas,” “used car dealer insurance Georgia,” etc.

There are quite a lot of companies that provide this car dealership insurance across the states.

However, there are so many types of used car dealership insurance, and not all companies offer all of them.

Below are the various types of insurance coverage for used car dealerships.

Types Of Insurance For Used Car Dealers

General Liability

Just like the name implies, this insurance coverage provides protection for quite a lot of things; this includes bodily injury, physical damage on a car parked on your lot/garage, property damage, misleading adverts, libel, copyright infringement, and other things.

Also, General Liability coverage can take care of some medical expenses, legal defense costs, and other expensesincurred while running your business.

This type of insurance is sometimes referred to as Commercial General Liability.

It is one of the most important used car dealer insurance you should purchase.

Employment Practices Liability Insurance (EPLI)

EPLI covers certain employment practices such as discrimination, defamation, criminal acts, harassments, breach of contract terms, and other employment-related problems.

This insurance coverage is an ideal option for every dealership for as long as there are people employed to handle different business operations.

Furthermore, this policy can cover for privacy-related issues and other things (based on the policy terms).

Workers Compensation

As the name implies, this insurance policy is for your employees. It covers for their health care (medical expenses) when any of them sustains an injury or requires medical attention due to work-related circumstances.

The plan also covers lost wages and services, and it is a compulsory plan for any business operating in certain states in the US.

However, while this insurance coverage protects your employees, you (the employer) are also protected from some negligence lawsuits.

Commercial Property Insurance

Now here is a nice policy for auto dealerships that operate on leased space.

This insurance covers all the physical assets used in running your business – this can include computers, printers, workspace, etc.

It is not only for dealerships operating on leased space, if you own your business space, this policy is also considerable (especially if you make use of many physical assets for your business operations).

Garage Keepers Liability

While this is not a compulsory insurance policy, it’s essence is to protect your budget from in the event of damage to another person’s vehicle parked in your lot or garage.

If you allow other peoples’ cars into your lot for repairs or trade-in, then you should consider getting this insurance coverage just in case something happens to the car while in your care.

With Garage Keepers Liability, you’re protected against damage, theft, vandalism, collision, or other damages to a car that is not owned by you but parked in your lot.

Note: Garage Keepers Liability is quite different from Garage Liability

Business Income

Since natural occurrences do not give prior notice before they strike, this auto insurance policy is quite advisable for used car dealers.

It is an insurance that protects your business income in the event of a natural calamity.

The insurer will ensure that your business capital (payroll expenses) is not affected while fixing damages as a result of the unprecedented accident.

It is an ideal policy to be considered by big auto dealerships; nevertheless, small dealership business owners can leverage this policy.

Garage Liability

This insurance is different from Garage Keepers Liability – both policies offer different protection. Particularly, Garage Liability is mostly purchased by franchised dealerships.

It covers bodily and property damages from an incident that happened within the business premises.

This policy somehow combines General Liability, Legal Liability, and Commercial Auto Insurance terms into one.

These are the available used car dealer insurance policies. However, depending on the insurance company, the policy terms and coverage will definitely differ.

A good company to consider for used car dealership insurance is coverwallet.

Cost of Used Car Dealership Insurance

To get the actual cost, you need to request for a quote from the insurance company.

Since quotes are freely requested, you can request quotes from different companies for the policies you want to buy, and then compare the price together with the features you’ll get for choosing to with one of the companies.

What More?

While requesting quotes for auto insurance, the insurance company may ask to know your location, total number of employees, and some other things so they can send you a suitable rate.

Carefully read through the legal pages, terms, and privacy policy of an insurance company before you facilitate any transaction.

Some business owners make the mistake of not reading through the legal pages or documents of an insurance company before applying for a policy; hence, they become spellbound by specific terms that seem uncomfortable and unnecessary.

Also, when you call or contact the insurance company, ensure that you engage the customer support representative into meaningful business discussions; ask questions on the terms you don’t understand, seek to be clarified on certain things (that doesn’t seem normal) on the company’s website or legal documents.

Finally, you should check for other people’s reviews about the insurance company – look up the company on consumer platforms such as BBB, ConsumerAffairs, and other reliable platforms to read real reviews about businesses.

More handy tips about buying and selling used cars can be read from our homepage and you can also reach out to our team using the contact page on this website.

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