Auto dealers have very specialized insurance needs. An auto dealership has owned vehicles being driven by staff and customers, non-owned vehicles being serviced or repaired, as well as a large and valuable inventory of vehicles subject to vandalism, theft, and collision damage. To properly cover these various exposures, it is helpful to understand some of the unique coverage available on auto dealer insurance policies. Safeguard Insurance offers some helpful auto dealer insurance tips to keep in mind when looking for quotes:
Car Dealer Insurance Coverage
False Pretense Coverage for Auto Dealers
Garage and dealer insurance policies exclude coverage for the voluntary loss of vehicle by “fraud, trick, or device”. False pretense coverage removes that exclusion, usually with a coverage sub-limit or a maximum limit per vehicle. An example would be an auto dealer that gives a vehicle to a customer only to discover a few days later that the payment method was fraudulent (i.e. phony check). Coverage may also be provided if a dealer purchases a vehicle from someone who did not have legal title to the auto.
Truth in Lending & Other Dealer Errors & Omissions
Errors and omissions claims for auto dealers can fall into several categories including title issues, odometer disclosure, truth in lending issues, and even the sale of insurance products (i.e. extended warranties, life insurance, disability, GAP, etc.). Dealers E&O coverage is available on most policies and the premium is very reasonably priced. We recommend every auto dealer consider purchasing E&O coverage.
Dealers Physical Damage AKA Open Lot Insurance Coverage
This coverage is very similar to the physical damage portion of a standard personal auto policy. It includes comprehensive and collision claims and is sometimes referred to as “dealers open lot” or DOL coverage. The coverage applies to all vehicles in your inventory and may have a maximum limit per vehicle, along with a per loss limit or aggregate limit. Generally, it covers only owned vehicles (owned by the dealership) but can be endorsed to include consigned automobiles as well. This coverage is usually subject to a co-insurance provision, often 100%. This means the amount of coverage needs to be carefully evaluated and reviewed by the dealership frequently. Your policy limit must closely equal the total value of your vehicle inventory.
Garage Keepers Legal Liability
Garage keepers coverage also pays for physical damage to vehicles but, unlike dealers open lot coverage, it applies to non-owned vehicles. Typically, this refers to customer vehicles that are held for service or repair. Once a vehicle is sold, dealers physical damage coverage on that vehicle ends. If the car is brought back to you for repair work, you should carry garagekeepers liability in case the vehicle is damaged while in your custody.
Auto Dealer Insurance Underwriting Tips
Driver Disclosure Form
Auto dealer insurance underwriters require all employees and family members that operate vehicles to be disclosed on the application. Many policies have provisions that limit or reduce liability coverage limits if an accident involves an undisclosed employee or family member. Do not make the mistake of hiding drivers from your insurance agent in an attempt to save a few dollars on your premiums.
Employee Rating Evaluation Classifications
Most auto dealer insurance policies rate employees based on the type of job they do. For example, a lot porter may be rated differently than a salesperson. Make sure your agent understands what each of your employees do so they are properly rated and covered by the policy.
Furnished versus Non-Furnished Vehicle Operators
Employees and family members that are given a dealer-owned vehicle for personal use are considered “furnished operators“. The underwriter will charge more for those drivers because they have 24/7 access to a vehicle for personal and business use. As with driver disclosure, make sure you fully disclose which employees and family members are furnished a vehicle for personal use.
Las Vegas Auto Dealer Insurance Quotes
For 20 years the team at Safeguard Insurance has been one of the leading providers of auto dealer insurance in Nevada, Utah, Arizona, and California. We work with several different insurance carriers that specialize in dealer insurance. In addition, we have an exclusive Nevada non-franchised auto dealer program written by an A-rated admitted insurance carrier. We work with dealers of all sizes, whether new in business or long established. Contact us today for a no-obligation auto dealer insurance quote.