Congrats, you’re about to enter the used car business! You’ve been thinking about this move for years. You have a game plan of how you’ll acquire the cars and since you’re a natural born salesman, you know you can move them. You may even know the perfect location. That sweet spot on the corner that everyone can see… As you know, there are a lot of details involved in running a business and of course a used car dealership is a different beast all together. You need to be licensed and bonded, you need the right staff and equipment, and you need the right used car dealer insurance.
Used car dealerships have a unique set of risks and exposures. There will be customers on your lot that may slip and fall. Your employees may be exposed to chemicals and toxins. Your inventory may be stolen. And, you have people driving vehicles that could possibly inflict a lot of damage! That’s just to name a few… And, without the proper used car dealer insurance, any one of these events could ruin a business.
Start thinking about preventative measures. Make sure you have safety protocols in place for you and your employees. And, a safety checklist to protect your customers. Examples would be… Are there non-skid or no-slip floor coverings used in high traffic areas? Is there a policy for sales reps or repair techs taking test drives with customers? Are there no smoking signs posted on your lot? We will break down more loss control measures in another post.
When searching for used car dealership insurance you not only want to shop on price, but the amount of coverage. Take in to consideration what the day-to-day operations of your pre-owned dealership will be. Do you offer repairs? Do you lease? How many employees do you have and what are there roles? All of these factors and more will determine what type of insurance coverage you need. Below are some terms that are important to used car dealership insurance…
Garage Liability
The point of this policy is to cover bodily injuries or property damage caused from the operation of your business. Example: If a customer slipped on your lot, this would cover that claim and also pay for defense cost in the case of a lawsuit.
Dealer Open Lot
This is what covers the physical damage of your inventory. Damage may be caused from accidents, vandalism, hail, lighting, theft, flood, explosion, windstorm, and malicious mischief.
Garagekeepers Liability
Not to be confused with Garage Liability. If you’re planning on performing repairs at your pre-owned auto dealership, then you need this coverage to protect you while you are in possession of your customers’ cars. (Tip: we’ll make it easier for you to understand Garage Liability vs. Garagekeepers Insurance)
Auto Liability
Provides protection in the event of an auto accident involving one of your vehicles.
False Pretense
Can you imagine someone driving one of your cars with fake documentation? What if they didn’t return the car?! This protects you if you’re ever scammed or cheated.
E&O Coverages
Errors and Omissions covers your pre-owned dealership’s operations related to title errors and omissions, federal odometer and prior damage liability, and truth in lending and leasing liability.
Bonds – A very import aspect of the used car dealership industry. You need used car dealer bonds to make sure you are in compliance with state laws. We delve deeper into this topic in our post – What You Need To Know About Dealer Bonds.
Workers’ Comp
Accidents can happen at any job. But, as we discussed there are unique job-related hazards at a used car dealership, such as strain from heavy lifting, injuries from being struck by vehicles, or even chemical burns (that’s just scratching the surface)… Any one of these could lead to expensive medical bills, lost wages and costly lawsuits. Protect yourself and your employees with industry specific coverage.
These are just a few of the coverages you need as a used car dealer. There are many more to take into consideration; Cyber Liability, Employment Practices Liability, Lessor’s Contingent Liability are just a few. That’s why it’s important to partner with an independent insurance agent that specializes in used car dealership insurance and the risk inherent in the auto industry. As well as a company that is proactive in provided loss management solutions. Again, price is very important when researching the right insurance for your pre-owned dealership, but perhaps even more important is making sure you are covered in the event of a loss. And, making sure the insurance company you choose truly has your best interest in mind.
