For car guys and gals, insurance is a lot like compliance; we hate to deal with it, but we know we have to.
Those who have been operating for a number of years have a pretty good idea of what they need to look for in a garage policy and generally shop their coverage annually.
For those that are new to the business or haven’t dealt with the insurance side of things much before, this can be a very daunting task.
Every state and every dealer are going to have requirements specific to them based on state law and the dealer’s tolerance for risk.
This article is meant to give you a basic idea of what to look for in a policy.
- Liability/Auto -- This generally deals with test driving or when your covered employees are driving your vehicles. This covers medical bills and damage to someone else’s car or property if you, your customer, or your employees are involved in an accident that is their fault while driving one of your vehicles.
- Other Liability -- This would cover medical bills if someone fell or had an accident while they were on your lot. Think about someone slipping on an icy sidewalk or an oil slick.
- Personal Injury Protection -- This would pay medical expenses for you or occupants of your vehicles. This coverage is required in some states.
- Inventory -- (Your vehicles) can include comprehensive for things such as fire, hail, or vandalism as well as collision coverage, and might have a maximum value per vehicle. Some dealers who own their vehicles outright and have a very low ACV (actual cash value) do not carry this coverage at all.
There are other coverages you may consider. These are usually add-on benefits that require an increase in premium.
- Truth in Lending -- Covers mistakes made on contract or incorrect reporting of odometer.
- Errors and Omissions -- Have you ever made a mistake when perfecting a lien? That’s what this coverage is for.
- False Pretense -- Covers you from consumers who purchase using false information or bad checks.
This should give you a good starting point to understand what to look for in a garage/liability policy. Remember, no policy is right for every dealer or state, and rates may vary wildly for very similar coverage.
Also, be sure you know exactly what your policy says. Every provider is going to have different requirements for what they will cover. For example, they may not cover a wreck on a test drive if your salesperson is not in the vehicle. These are important items for you to know.