If you own or manage a car dealership, you know how auto dealers are different from other retailers and can benefit from insurance tailor-made for the industry. Finding the right car dealer insurance (otherwise known as automotive dealers insurance) can help protect your inventory, your employees, and your business in the event of financial loss.

What makes car dealerships unique?

Car dealerships have unique features that can affect their insurance needs, including:

  • High-value inventory both inside the showroom and on the lot. Usually stored close together, they can be particularly vulnerable to fire, natural disasters, and vandalism.
  • Several business functions can exist on the same site, including new and used car sales, vehicle servicing, and purchase financing.
  • Test drives, where inventory is taken off the business premises and onto public roads.

What are some of the risks car dealerships can face?

Inventory damage and loss

Car dealerships can carry a great deal of expensive inventory, sometimes fully accessible from public roads or property. This can make dealerships an attractive target for thieves as well as for potential vandals. With brand-new vehicles, even a small scratch can result in losses for a dealership.

Liability risks

 Liability protection is crucial for car dealerships. There can be multiple potential causes for a claim, including:

  • Customers being injured in a showroom, on the lot, or in the service area of the dealership.
  • Product liability, where damaged or malfunctioning products could result in financial loss or reputational damage.
  • Third-party bodily injury and/or property damage if a vehicle is involved in an accident during a test drive.
  • Property damage or injury arising from servicing work.
  • Cyber breaches in which customer data is compromised.

Cyber attacks

Car dealerships can often store sensitive information such as customer names, addresses, and credit card numbers. This means dealerships need to be particularly careful to protect their customer data.

IT systems can also be essential when keeping track of inventory and tracking sales. If a car dealer is unable to access this data for more than a few hours, it may result in financial consequences.

Environmental risks

Car dealerships can work with hazardous substances and frequently have to dispose of used motor oil, lubricants, coolants, and tires. Spills or incorrect disposal could lead to expensive cleanup costs or environmental remediation..

Car dealer insurance may be able to help if you experience any of these risks but it’s important to always speak with your insurance specialist for the exact coverage details of your car dealer insurance policy.

How car dealer insurance can help mitigate risk

Protecting your car dealership may require several different types of coverage. It’s important to always speak with an insurance specialist to identify what’s right for you. Some of these coverages may include:

Commercial property insurance

Commercial property insurance can help with the cost of replacing stolen, lost, or damaged physical assets, such as buildings, furniture, supplies, tools, equipment, and technology. Your policy may also include coverage for fire, flood, theft, natural disasters, and severe storms.

Commercial general liability insurance

Commercial general liability insurance, also known as CGL insurance, can help with the expenses involved with liability claims. These might include:

  • Injuries to visitors and customers on the dealership property.
  • Damage to a third party’s property while on the business premises.

Product liability insurance

A product liability claim can arise from damage or injury caused by something purchased from your dealership. This can include vehicles themselves, parts, or many other products.

Liability for a vehicle defect may in some cases fall to the manufacturer, but the car dealership can also be held responsible if, for example, the car was altered at the dealership.

Cyber insurance

Customer data stored on a dealership’s computer system often makes cyber insurance an important coverage to consider. This type of insurance can help with expenses related to a data breach or cyber attack.

Professional liability insurance

Also known as errors and omission insurance, this type of insurance can help protect against liability claims related to service or advice offered by dealership staff. This insurance can be particularly important if your dealership sells financing or insurance products.

Ensure you’re protected with car dealership insurance

Finding the right car dealership insurance for your business can sometimes be complicated. That’s why Federated has developed industry-specific solutions for the car dealership industry. Our insurance specialists will work with you directly to understand what makes your business unique and what coverages may best suit your needs. With this information, we can tailor policies to offer you coverage that fits your business.

To help with your overall risk mitigation strategy, our experienced risk services team, can also assist you with risk assessments, education, and consulting. Request a quote today

 

This blog is provided for information only and is not a substitute for professional advice. We make no representations or warranties regarding the accuracy or completeness of the information and will not be responsible for any loss arising out of reliance on the information.