Best Insurance for Dealerships

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Contributor, Benzinga
September 9, 2020

Most any kind of business can benefit from some form of insurance. Dealerships are no exception. Read on for everything you need to know to find the right dealership insurance policies.

Best Dealership Insurance

To find the best coverage options for your dealership, start by looking for insurance companies with plenty of experience. Here are some insurance companies you may want to consider to protect your dealership.

Types of Dealership Insurance

There is no 1 policy that fits each dealership’s needs. To get the right insurance for your dealership, you’ll need to review coverage options and select the options that make the most sense based on your dealership. 

Here are some types of insurance coverage that you may want to consider:

General Liability Insurance

General liability insurance offers a range of financial and legal protection for your dealership business. Dealerships are typically large spaces, and the larger a space is, the more opportunity there is for an accident to occur. This type of coverage can help protect your dealership from claims of bodily injury and property damage. 

When you own a business, it becomes liable for actions that occur on your business premises, and even actions that occur at the hands of your employees. There are several instances in which you might need to rely on your general liability insurance to help pay for medical expenses and legal costs related to a lawsuit.

For example, if your employee is driving 1 of your dealership’s cars and accidentally bumps into another car, your business may be sued for damages to the car. If an employee mops up your dealership’s show floor and a customer slips and breaks their wrist, your business could be held liable. 

In addition to bodily injury and property damage, general liability insurance can also offer coverage for lawsuits claiming libel and slander. This could include situations such as your employees overheard talking negatively about another business or an accusation of copyright infringement. 

Commercial Auto Insurance

As a dealership, you likely recommend personal auto insurance policies to your customers daily. If your dealership owns any company vehicles, you may want to become familiar with commercial auto insurance policies as well. Commercial auto insurance works similarly to personal auto insurance policies in that it offers liability and physical damage coverage. 

Errors and Omissions Insurance

Errors and omissions insurance is a type of professional liability insurance that can be especially important for dealerships. It can protect your dealership, yourself and your employees against claims of inadequate or negligent actions. 

For example, if an employee makes an error on a customer’s loan paperwork, your dealership could be held liable for the customer’s damages. You would then be able to file a claim with your insurance company to receive coverage for the costs of handling the problem.

If your dealership faces a valid claim, your errors and omissions insurance may be able to cover the court costs and settlement costs that arise from the claim. Some insurance companies have experience putting together errors and omissions insurance policies specifically for dealerships to make sure everything you need is covered. 

Property/Equipment Breakdown Insurance

If its equipment is essential to a business’s daily operations, it might be a good idea to insure it. As a dealership, you’re probably aware of how an equipment breakdown can affect business. This type of insurance coverage can help you avoid and recover from business interruptions due to equipment breakdown

Equipment breakdown could refer to many things. For example, it could be caused by an electrical power surge, poor workmanship, operation error or even inadequate equipment maintenance. 

If you’re considering this type of coverage, you should look into an insurance company’s risk control services. Working with a company’s risk control professionals can help your dealership avoid equipment breakdowns from occurring in the first place. These professionals can help you identify and develop management strategies for equipment risks that your dealership faces. 

Workers’ Compensation Insurance

Most dealerships are filled with employees that your business is liable for. Workers’ compensation exists to offer protection for both your employees and yourself as the owner of your business. 

If 1 of your employees gets injured on the job, your workers’ compensation policy can cover the employee’s medical costs as they get treatment for their injury. It can also cover treatment for an employee’s illnesses if the cause of the illness is work-related. 

Your employee can also benefit from wage replacement if they have to stay home to recover and can’t return to work. It can also replace some lost wages if your employee can’t return to work in the same capacity as they did before the injury or illness occurred.

As the owner of your dealership, you’ll also benefit from workers’ compensation insurance. You and your business will be protected if an injured employee or their family sues your business. Your insurance company can help cover the legal costs related to defending your business against a lawsuit from an injured employee or their family members.

Employment Practices Liability Insurance

If your dealership has ever faced an employment-related claim, you could benefit from this type of insurance coverage. Employment-related claims include allegations of things like wrongful termination, discrimination, workplace harassment and retaliation. These types of claims can affect businesses of every size and cause a number of issues, such as damaged employee morale, damage to your business’s reputation and even financial damages.

This type of liability coverage typically includes coverage for defense costs and other damages to your business from an employment-related claim. 

Commercial Umbrella Insurance

Think of an umbrella insurance policy as an umbrella for your business. It can offer your business a wide variety of coverage for situations that can come on unexpectedly. Umbrella insurance is particularly useful for businesses that have a large number of assets, such as a dealership. 

Commercial umbrella insurance can offer an additional layer of protection for your dealership. If your other liability policies face claims that reach and surpass your other policy’s annual coverage limit, you may be able to supplement it with your umbrella insurance policy. This can give your business peace of mind if your dealership happens to face claims that cost more than expected.

Cost of Dealership Insurance

The cost of your dealership’s insurance policy can depend on a number of important factors. When thinking about business insurance, it’s important to understand that it’s unlikely for any 2 policies to be exactly the same. 

The factors that help an insurance company determine your dealership’s insurance rate include:

  • Your dealership’s physical location
  • The condition of your dealership property, including the building
  • The size of your business and how many employees you have
  • The length of time that you’ve been in business
  • The size of your payroll annually
  • Any history of past insurance claims
  • The coverage limits of your insurance policies. Coverage limits are the maximum amount of money an insurance company will pay out for that policy’s claims per year.

According to Progressive, the median cost for workers’ compensation insurance is $816 per year. To find the most accurate information about the cost of getting insurance for your dealership, you should start by getting a quote. 

All you need to do is enter the ZIP code of your dealership to get started. Getting a quote is fast, free and doesn’t mean you’re obligated to purchase any insurance policies. It simply offers a way to compare insurance policies and see what the costs might be for your dealership. 

Some insurance companies may offer the option to bundle multiple coverages into a single policy. A common example is a business owner’s policy (BOP), which usually combines general liability and commercial property insurance into a single policy. BOPs and other bundled policies may offer additional types of coverage as well.

How Dealership Insurance Works

Dealership insurance is not a 1-size-fits-all insurance product that you can easily find and purchase. It’s a number of insurance policies that together can offer a wide variety of coverage for your dealership. 

You’ll find that some insurance companies offer suggested policies for select industries, including dealerships and other automotive sales businesses. If an insurance company offers this type of resource, it likely has experience insuring dealerships and other related businesses.

Make sure your insurance company understands the unique risks that a dealership faces. Working with an insurance agent and an insurance company that you trust can help you identify each risk and work to find a solution for it. Doing this can help you choose the best coverage options to protect your business.

A trusted insurance agent or company can also help you make sure that you’re meeting your state’s business insurance laws. The business insurance requirements can vary from state to state. 

For example, if you have any employees, you’ll most likely be required to have a workers’ compensation policy for your dealership. Your state may also have requirements for other insurance products such as general liability insurance and commercial auto insurance. You’ll want to be sure that you not only have the required policies, but also have policies that meet the minimum coverage amounts that are required by law.

Find Dealership Insurance today

As the owner of your dealership, you know that your business faces risks. Commercial insurance products can help you identify and manage these risks so that your business is protected if a claim is filed against you. 

It’s never too soon to get a quote and protect your dealership from financial damages. Start with our recommended insurance providers to find the right policy today.

About Ashley Hart

Ashley Hart is a personal finance writer passionate about helping people feel empowered to take control of their finances. She has more than eight years of writing experience, focused on insurance.