Car Dealerships Insurance – Cost and Types Of Policies

Whenever you budget the expenses of your business, car dealerships insurance must be high on the list because you can’t always know exactly what is going to happen in the future.

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With the protection provided by insurance against accidents and all the other kinds of insurance we will tell you about, you can protect your business and yourself in case something unforeseen happens.

Like any business owner, for your car dealerships enterprise, you must consider how much financial danger you are taking on.

Business Insurance for car dealerships

If your car dealerships business runs without proper insurance, you are taking a tremendous chance not just of losing some money but of a total wipe-out.

This is because the laws in every state are very strict in enforcing liability on the owners of businesses for the upshots of their actions. 

In this article, we are giving very general guidelines for startup businesses to explain what the main kinds of insurance that you need are, and where possible, a rough guide to how much you can expect to pay.

The question is, can you afford to NOT have insurance for your car dealerships business?

What this means, for any car dealerships business owner, is that if some customer claims that your actions caused them some physical or economic damage, a court can award damages far beyond the total size of your business.

Your car dealerships business is not protected by laws in the same way as states are, where legislation can place a “cap” on the maximum level of liability.

In some states, like New Jersey, there are specific monetary levels that limit the amount a court can award in any case against the state.

In a court case, it’s purely the duty of the jury to award whatever amount they deem appropriate, even sometimes giving a claimant more than they have claimed.

When you are running your car dealerships operations, you can’t escape responsibility for the consequences of your actions.

Even more importantly, unless you have spent in advance the money necessary to have your business running as a corporation, all of that liability belongs to you as an individual.

What does car dealerships insurance protect you from?

For your car dealerships business, the most important types of insurance are designed to cover the risks to your business from accidents, from unexpected events, and from mistakes.

Also there are some mandatory kinds of insurance that various states require.

In the next few paragraphs, we will outline the most important points any car dealerships business owner should know when negotiating the insurance needed.

The main headings of insurance for your car dealerships businesses are liability insurance, commercial insurance, asset insurance and workers compensation insurance.

Liability insurance

General liability insurance

Any car dealerships business is dealing directly with other people, and that means you always have the danger that some accident can happen to them bodily or else something of theirs can be damaged.

In such a case, they can demand compensation.

General liability insurance policy for your car dealerships business protects you against claims coming from injury to customers or damage to their property.

It protects your car dealerships business from the claims themselves and also to any follow-on court costs and legal fees of the lawsuits.

In many cases, it will even help you to qualify for extra business from city and state organizations, where contracts insist on proper liability insurance.

The average level of general liability insurance for your car dealerships business would be with a boundary of $1 million for a single claim and a total of $2 million for the whole year.

See the table in the costing section below for average prices of general liability insurance for your car dealerships insurance operations.

Professional liability insurance for your car dealerships business

In the event where a buyer alleges some negligence, errors, or omissions in how you conducted your car dealerships business for them, you can quickly be involved in a court case.

Even if the lawsuit against you is judged in your favor, the cost of defense can be large, and the impact on your reputation can be damaging.

Almost all small car dealerships business should have enough professional liability insurance to cover an individual claim of $25,000, with annual cover of $50,000.

See the table in the cost of car dealerships insurance section below for average prices of professional liability insurance for your car dealerships operations.

Product liability insurance

Whatever goods you sell or advice you give about the goods, you are running a risk that clients may claim that the results didn’t meet your description of function, or that your advice was basically incorrect.

You need to know the explicit laws of product liability in your own state.

For example, in California, all businesses in the supply chain can be held culpable for results caused by products claimed to be defective.

To cover yourself against any following lawsuit, you need Product liability insurance for car dealerships

Only you can know exactly how much insurance you need.

Best advice is to consult with experienced insurance agents, brokers or company representatives for support.

Commercial insurance

Commercial vehicle insurance for your car dealerships business

Take care! – most policies for private vehicle insurance do not cover any event like theft or accidental damage when the car is being used for business purposes.

The best way to make sure that your vehicle is insured for both its own value, and the valuable contents, is by taking out a designated commercial vehicle insurance package.

Commercial truck policies guarantee the value of any vehicle in case of accident, malicious damage, fire, or theft.

As well, in case of any accident, the van itself, the content and any legal bills, medical expenses, and property damage is guaranteed if your van is involved in an accident.

Most states, other than Virginia and New Hampshire, require this type of insurance.

The necessary value of the insurance depends on the depreciated value of the vehicle, and your declared level of cover of contents. 

Tools and Equipment insurance

Since your car dealerships business needs specific and expensive equipment, you can appreciate how much it can cost to replace it in case of any damage, loss, or theft.

The gear may be subject to malicious damage, deliberate fire, theft, other such unforeseen acts.

As well, acts of nature like lightning strikes, hurricanes, earthquakes, and other highly damaging natural events can destroy your whole business in one stroke.

Unless you can afford to immediately replace such specialized gear quickly out of your own pocket, you must have full-level equipment insurance so that you can immediately buy any equipment needed to keep your car dealerships business running.

It is hard to advise how much equipment insurance you need – it’s basically dependent on how much you have invested in your car dealerships business’ equipment.

Commercial Property insurance

Any car dealerships business that owns or rents space in a building should have a commercial property insurance policy.

If you own the property, you certainly have a substantial capital investment, as well as a big liability if there’s a mortgage.

Your physical building location should carry insurance coverage for the value of the premises and contents against accidental occurrences like fire and storms, and against deliberate damages like theft and vandalism.

If your car dealerships business operates in areas of high risk, like Texas or South Carolina, supplementary coverage may be needed for earthquakes and hurricanes or tornadoes.

In other states like Washington, where unlimited cold snaps can cause damage to outer coverings of car dealerships business premises, there is a need for more additional cover than in warmer climes.

Although the level of cover depends mainly on the value of the property, it’s not possible to say what cover your need, but we have been able in the table in the cost of car dealerships insurance section below to give some idea of the average prices per million dollars of property insurance for your car dealerships business.

Temporary insurance by month, week or day for your car dealerships business

Is your car dealerships business working part-time or casually, or is the level of business fluctuating?

Using short-term insurance makes excellent sense. Business insurance by the month, day, or week – temporary insurance for car dealerships – are special policies where you can cover a specific period when you want to be covered.

By only paying for that period of cover, you will save by having less premiums but still having the same risk cover.

The essential feature of short-term insurance is that you purchase the cover for a defined period – a specific date, or a week or month starting on a specific date, for example for 30 days beginning on the specified date.

When you are expecting periods of higher business activity, get the existing cover improved.

Talk to your insurance agent, broker or the company’s representatives to see what options you have.

Business Owners Policy BOP for your car dealerships business

You have the option to combine a few of the important kinds of small business insurance in one policy that is known as the business owner’s policy – BOP.

A BOP merges commercial property and public liability insurance by amalgamating these coverages into one insurance policy, which can save you money.

BOP insurance will shield you if any claims of injury or property damage are made.

It is often the right choice for small and medium-sized car dealerships businesses, such as yours.

There are some limits that will rule whether BOP is suitable for your own business.

BOPs do not cover your professional liability or commercial vehicle risks.

Also, the size of your business will dictate whether you are allowed to take out BOP cover.

The normal business that is allowed to take a BOP policy must have fewer than one hundred employees, and under five million dollars in annual sales.

Plus, you must separately take out the necessary worker’s compensation, health and disability insurance as determined for your state.

Workers Compensation insurance for your car dealerships business employees

In most states, it is mandatory to have workers compensation insurance when your car dealerships business has one or more employees.

Workers compensation insurance covers the enterprise against any costs that arise if an employee experiences an injury or becomes sick as a result of work.

The benefits include medical expenses, death benefits, lost wages, and vocational rehabilitation.

Failure to meet a state’s requirements in this regard can leave you as the employer obliged to pay penalties levied by the states.

Some states, such as North Dakota, Ohio, Washington, West Virginia, and Wyoming only permit coverage from the government-run monopoly state funds.

In these states, you may not get your workers compensation obligations from private insurance companies.

Workers compensation charges are calculated based on the employee’s pay, and usually come out at around $1.00 per $100 per month.

However, you must see the relevant authorities in your state.

Average costs of these types of insurance

Although every car dealerships insurance level is unique, there are enough examples of average quotes from insurance companies for us to give rough guidelines, including what are the cheapest rates offered.

Of course, you should always check with an insurance representative what’s relevant for your business.

The list below is of annual premiums we have collected for the main types of insurance your car dealerships businesses needs.

Types of insurance Price range
Public liability insurance $305 – $750
Product liability insurance $260 – $700
Commercial insurance $1015 – $2085
Commercial vehicle insurance $1875 – $2925
General liability insurance $630 – $850
Equipment insurance $330 – $1420

Cost of insurance for your car dealerships operations depends on many different factors.

We have estimated these figures for small independent car dealerships businesses.

In larger states like California, premiums are generally about 20%-30% higher than national averages, while in smaller states like New Mexico, they usually are about 20%-30% lower.

The location and size and type of your car dealerships business can have a big effect on the cost of different policies.

You should talk to professional insurance agents and brokers, or insurance company representatives.

Also you can let the internet do the work for you by enquiring about insurance companies near where your business is located.

Another good source of information is the local Better Business Bureau in your suburb.

FAQ

What is small business insurance for car dealerships operations?

This is a wide term used to describe common insurance policies designed to protect car dealerships business owners from risks like bodily injury, property damage, claims of negligence.

Does my car dealerships business have to have insurance?

Some of the forms of insurance are not mandatory for you to operate your business, but they can protect you from risks in your business operations.

Some other forms are required by state law, such as workers compensation and vehicle insurance.

What does a small car dealerships business insurance policy cover?

Liability insurance provides insurance against lawsuits or claims filed by a third-party for bodily injury, property damage, or negligence.

The precise cover will vary based on your own operations.

See the table in the costing section above for average prices of the most common policies for car dealerships insurance.

How much will car dealerships business insurance cost?

In addition to the size of the business, some other factors, such as location and claims history, are used to determine your policy’s cost.

You should discuss with professional insurance agents and brokers, or insurance company representatives.

You can search for more information insurance for car dealerships, in the search box below, and follow the relevant links.

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