Insurance: Do you have adequate coverage?

  • August 08, 2018
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Before they can legally drive a vehicle, individuals must obtain a minimum level of automobile liability insurance. Similarly, dealerships are also legally required to carry certain types of insurance to operate in most states.

If you haven’t reviewed your store’s insurance policies recently, now might be a good time to do so. Your goal is twofold: to make sure you have the right coverages for the risks involved in operating your dealership and to keep your insurance premiums as low as possible.

SORTING THROUGH TYPES OF INSURANCE

There are three main types of insurance for automobile

dealerships:

1. Garage liability insurance. This coverage forms the foundation of most dealerships’ insurance programs.Combining premises, auto, and products and completed operations liability coverage, it provides protection for bodily injury and property damage claims caused by an accident that arises out of your garage operations. Dealerships are normally required by law to carry garage liability insurance. As you review your garage liability policy, look for exclusions and limitations that can limit the amount of your coverage. For example, rental and leasing, racing and watercraft often aren’t included in a standard policy. Some carriers will offer limited coverage for these events, but you might have to buy a separate policy to cover them. Garage liability insurance also typically excludes property damage to customer vehicles left with your dealership for repair, servicing or storage. You can purchase additional coverage, known as garagekeepers coverage, for protection against damage to customer vehicles left in your care, custody or control.

2. Physical damage insurance. Also sometimes called “dealer’s open lot insurance,” this coverage protects against loss to your vehicle inventory that’s held for sale. Coverage may also extend to other land motor vehicles, such as golf carts and construction equipment. Dealerships are usually required by lenders and floor planners to carry physical damage insurance. Most physical damage policies cover collision losses and at least one of the following: comprehensive coverage, fire and theft coverage, or coverage for “specified perils.” Comprehensive covers all damage risks except those specifically excluded by name, while specified perils covers specific risks listed by name; and fire and theft covers these risks specifically.