Company insurance is intended to safeguard the financial assets of a business owner and is a vital investment for a car dealership.
This article will discuss the primary insurance coverage for auto dealerships, general liability insurance, as well as additional products that are appropriate for this industry.
General Liability Insurance for Automobile Dealers
Every firm, regardless of sector, has risks that should be insured. General liability insurance is the most frequent and comprehensive form of coverage that company owners purchase.
General liability insurance covers the following risks:
Damage to property
Legal defence and decision
Personal and commercial harm
While general liability insurance is not legally needed for companies, operating without it is exceedingly dangerous. If your company is sued, you might face costs in the hundreds of thousands of dollars (or more). The only way to avoid this sort of catastrophe from destroying your organisation is to have an adequate general liability insurance coverage in place to assist pay for these losses.
Situations That A Car Dealership’s General Liability Insurance May Cover
Example 1: A consumer is strolling across the parking lot and does not see any obstructions. He trips and falls, breaking his arm. Your general liability insurance coverage will cover his medical care so that your firm does not have to.
Example 2: A worker is transporting a vehicle from one section of the lot to another when he runs into a car-shopping consumer. Despite the fact that the vehicle was not travelling at a high speed, the contact with the automobile and the impact with the ground caused substantial injuries to the client. Your consumer launches a lawsuit against your company. Your general liability insurance coverage will cover the costs of the litigation, including any settlement if the matter is resolved out of court.
Example 3: The new advertising campaign you paid for goes after the competition very aggressively, prompting your opponent to sue your company for libel. Your general liability insurance coverage will cover your legal expenses whether you win or lose the lawsuit. It will also pay for a settlement if the matter is settled outside of court.
Of course, this is not an entire list of risks covered by a general liability insurance policy, and certain situations may result in a specific peril not being covered. To minimise coverage gaps, it’s always better to speak with your agent about the terms of your policy.
General Liability Insurance Cost
For $1 million in general liability coverage, the typical auto dealership in America costs between $450 and $1,000 each year.
The cost of your coverage will be determined by a number of variables. Among them are your:
The overall aggregate limit
You may be able to get general liability insurance at a lower cost if you buy it as part of a business owner’s policy (BOP) rather than as a separate policy. A business interruption policy (BOP) is a more complete option that covers numerous types of coverage, such as business interruption and property insurance.
Other Types of Coverage Required by Car Dealerships
While general liability insurance is the most crucial, there are various different types of coverage to be aware of. Other forms of insurance that all vehicle dealerships should have are as follows:
Insurance for Commercial Property
Your business property has a high monetary worth. If an unforeseen tragedy strikes, such as a large storm or fire, and damages some or all of your vehicles, it may be enough to put you out of business. As a car dealership owner, you should acquire commercial property insurance with coverage sufficient to cover the high value of your inventory.
Insurance for Workers’ Compensation
Carrying workers’ compensation insurance is a vital component of being an employer, and it is required by law in most jurisdictions. Not only does having this insurance keep you legal, but it also assures that your workers can obtain the medical treatment they need if they are injured on the job. If employees are unable to work due to their injuries, your workers’ compensation coverage will cover both medical treatment and missed earnings.
Coverage Options for Automobile Dealerships
In addition to the insurance listed above, your auto dealership may need other forms of coverage based on particular elements of your business. Some of them may not apply to you, so be sure to ask your agent whether policies are appropriate for your company.
Umbrella Insurance for Businesses
Commercial umbrella insurance is added on top of a general liability insurance policy, taking up where the general liability policy’s limitations leave off. If your general liability insurance limitations are surpassed, such as if you lose a significant case, you may rely on the umbrella policy to take over and cover the losses until the umbrella policy’s limits are reached.
Insurance for Business Interruption
If a significant incident forces your firm to close for an extended period of time, such as after a tornado or other severe catastrophe, business interruption insurance may assist cover your expenditures and possible lost revenue during the downtime.
Additional Security Measures for Your Company
Although investing in company insurance is simple (and necessary), it should not be your first line of defence. Yes, insurance will reimburse your company for cash losses incurred as a result of an occurrence, but it is much preferable to avoid losses altogether.
With this in mind, here are a few steps you can take to better secure your company:
Make use of legally binding contracts and other business agreements. (We provide free templates for several of the most often used legal forms.)
To safeguard your personal assets, form a limited liability company (LLC) or a corporation. (To discover how to incorporate an LLC or company in your state, see our step-by-step tutorials.)
Keep your company licences up to date.
Streamline the internal procedures of your company. This will eliminate unneeded variables from routine activities and establish a secure, consistent environment in which to do business.
If your company is an LLC, you should check into LLC insurance.