Auto dealer insurance is essential for any car dealership. Whether you run a small used car lot or a large multi-location showroom, this coverage protects your vehicles, property, employees, and customers from costly risks.
What Is Auto Dealer Insurance?
Auto dealer insurance is a business insurance package designed for dealerships. It covers multiple risks including vehicle damage, liability for accidents, and protection for customer vehicles left in your care.
Why Do Dealerships Need Auto Dealer Insurance?
Every day, dealerships face risks like theft, vandalism, and accidents during test drives. Without insurance, one major loss could financially cripple your business.
Main Types of Auto Dealer Insurance Coverage
Garage Liability Insurance
Covers bodily injury and property damage caused by dealership operations, including test drive accidents.
Dealer’s Open Lot Coverage
Protects your entire vehicle inventory against risks like theft, fire, hail, and vandalism.
Garagekeepers Liability
Covers damage to customer vehicles while they’re being repaired, detailed, or stored.
Workers’ Compensation
Pays for medical bills and lost wages if an employee is injured on the job.
Business Property Insurance
Covers your buildings, office equipment, and tools from fire, storms, and other hazards.
Cyber Liability Insurance
Protects your business from data breaches and online fraud.
Surety Bonds
Required by most states for licensing, guaranteeing you follow industry laws.
How Much Does Auto Dealer Insurance Cost?
The cost depends on your location, inventory value, services offered, and claim history. Small lots might pay $300–$600 per month, while larger dealerships could spend several thousand.
Factors That Impact Your Premium
Location crime rates, safety measures, vehicle types, and your claims record can raise or lower costs.
Why Auto Dealer Insurance Rates Are Rising
Higher vehicle prices, costly repairs, increased theft rates, and severe weather have driven premiums up in recent years.
Tips to Reduce Auto Dealer Insurance Costs
Install surveillance cameras, hire experienced drivers for test drives, bundle your coverages, and get quotes from multiple providers.
Common Claims in Auto Dealer Insurance
Frequent claims include theft, storm damage, customer injuries on-site, and test drive accidents.
How to Choose the Best Auto Dealer Insurance
Look for insurers with dealership experience, fast claims service, and options for bundling coverage to save money.
Documents Needed for a Quote
You’ll typically need your dealer license, inventory list, number of employees, and claims history.
Auto Dealer Insurance Checklist
Verify state requirements, check liability limits, confirm inventory coverage, and include cyber protection if you store customer data.
Conclusion
Having the right auto dealer insurance is more than meeting legal requirements — it’s about protecting your dealership from financial disaster. With the right coverage, you can keep your business running smoothly no matter what challenges come your way.
