Auto and Car Dealership Insurance

What kind of work do you do?
Cars in the showroom at a dealership.
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Why do auto dealers need insurance?

Because your inventory is so expensive, business insurance is a crucial part of risk management for car dealers. Auto dealer insurance helps pay for damage caused by fires and storms. It also covers legal costs if a customer slips on your showroom floor, or gets into an accident during a test drive.

A car dealer handing the keys to two buyers.
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Find the right coverage

Insureon will help you find insurance policies that match the unique risks of franchised and independent auto dealers.

Get free expert advice and peace of mind knowing you have the right coverage for your business.

What types of insurance do auto dealers need?

These insurance policies cover the most common risks at a dealership.

General liability insurance icon

General liability insurance

A general liability policy covers basic risks at a car dealership, such as a customer who slips and suffers an injury. Add garage liability insurance to gain protection for consigned vehicles.

  • Third-party bodily injuries
  • Accidental damage to a customer’s car
  • Libel and slander lawsuits
Business owner’s policy icon

Business owner’s policy

A business owner’s policy, or BOP, is a cost-effective way for auto dealerships to buy general liability coverage and commercial property insurance together.

  • Customer injuries
  • Business property damage
  • Business interruption incidents
Commercial auto insurance icon

Commercial auto insurance

This policy covers damage to vehicles owned by new and used car dealers. It also pays for injuries and property damage caused by your vehicles.

  • Physical damage coverage
  • Vehicle theft and vandalism
  • Compliance with state laws
Workers’ compensation insurance icon

Workers’ compensation insurance

Workers’ comp is required in almost every state for auto dealerships that have employees. It also protects sole proprietors from work injury costs that health insurance might deny.

  • Employee medical expenses
  • Disability benefits
  • Lawsuits over employee injuries
Cyber insurance icon

Cyber insurance

Cyber liability insurance helps car dealerships recover from data breaches and cyberattacks. It's recommended for any business that stores credit cards or other personal information.

  • Customer notification expenses
  • Fraud monitoring services
  • Data breach investigations
Umbrella / excess liability insurance icon

Commercial umbrella insurance

This policy boosts the limits of general liability insurance, commercial auto insurance, and employer's liability insurance to protect against the most expensive kinds of lawsuits.

  • Multi-vehicle auto accidents
  • Customer injury lawsuits
  • Employee injury lawsuits
Looking for different coverage? See more policies.

How much does insurance cost for automotive services?

Auto services employee calculating insurance costs.

A small used car dealership can expect to pay less for insurance than a larger business.

Factors that affect premiums include:

  • Type of business
  • Business property and equipment
  • Business income
  • Types of coverage purchased
  • Policy limits and deductibles
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How do I get car dealer insurance?

It's easy to get new and used car dealership insurance if you have your company information on hand. Our application will ask for basic facts about your business, such as revenue and number of employees. You can buy a policy online and get a certificate of insurance with Insureon in three easy steps:

  1. Complete a free online application
  2. Compare insurance quotes and choose policies
  3. Pay for your policy and download a certificate

Insureon's licensed insurance agents work with top-rated U.S. providers to find the right insurance coverage and surety bonds for automobile dealers, whether you work independently or hire employees.

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Hear from customers like you who purchased small business insurance.

Common questions about car dealer business insurance

What is dealer's insurance?

Dealer's insurance is a specialized type of business insurance that protects business owners from the risks and potential lawsuits that come from owning and operating a car dealership. These policies not only cover risks that happen on the lot, but incorporates garage insurance for car dealers as well:

Dealer's open lot (DOL) coverage: Car dealerships often buy an additional type of insurance called dealer's open lot coverage. DOL provides physical damage coverage to an auto dealer's new and used vehicle inventory, and comprehensive coverage for fires, hail, vandalism, theft, and other non-collision damages.

Garage liability insurance: This policy is similar to general liability insurance, but extends coverage to the additional exposure of garage operations. For example, it would cover a lawsuit from a customer who slipped in an oily spot in your dealership's service center.

Garage keepers insurance: Businesses that store and service vehicles should also consider this coverage, which protects against accidental damage to a customer's car in your care, custody, or control.

Dealer plate insurance: One aspect of selling cars is the inevitable test drive. This policy provides coverage for the vehicle, driver, occupants, and third parties under some conditions during the test drive.

What other types of insurance coverage do car dealerships need?

DOL coverage isn't the only specialized coverage that your auto dealership might need. You should also consider the following insurance products:

Errors and omissions insurance (E&O): E&O insurance pays for legal costs related to mistakes and oversights, such as a lawsuit from a customer who complains of an error in a vehicle history report or loan document.

Surety bonds: State laws sometimes require auto dealer bonds as a prerequisite for your dealer's license. A surety bond protects your customers from fraudulent and negligent activities.

Business interruption insurance: A BOP often includes business interruption coverage, which covers costs when your business is forced to close temporarily due to a fire, storm, or other covered property claim.

Employment practices liability insurance (EPLI): EPLI covers employment-related lawsuits such as harassment, wrongful termination, discrimination, and other work-related issues. If your small auto dealership has employees, you would benefit from this policy.

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