When running a business, you must focus not only on profits gained, but also on potential losses. Most importantly, you must know how to prevent these losses. After all, in sports they say that the best offense is a good defense. One should absolutely apply such a principle when dealing with certain proprietary matters as well. This rings especially true for those working in the auto dealership industry. Operating an auto dealership comes with a plethora of risk considering the comprehensive nature of the business. Auto dealership coverages reduce these risks.
You could be an extremely lucrative auto dealership enterprise raking in mass amounts of dough, but without the proper financial protection in place, one accident or blunder could potentially cause your establishment thousands, maybe even hundreds of thousands of hard-earned dollars. So, what is the best way to go about safeguarding your company’s most valuable assets? Investing in insurance of course! And the proper insurance suitable for your particular dealership at that.
The type of auto dealership coverages you will require will vary depending on your dealership’s location, your vehicle inventory value, etc. You will want to speak with a trusted insurance agent to ensure that your policy is tailored to your specific needs. However, ensure the following five coverages are included in your policy. They have been proven to be essential for all auto dealerships across the board.
Open Lot Coverage
Open lot insurance coverage is also referred to as dealers open lot (DOL) or dealers physical damage coverage. This policy protects your bank account should any of your dealership vehicles or equipment get physically damaged. If physical damage were to occur, your DOL coverage would pay for the repairs needed up to your policy coverage amount. And this insurance coverage does not only protect private passenger vehicles. Dealers open lot insurance can cover modes of transportation such as motorcycles, antique vehicles, trucks, ATVs, and tractors as well as other farm equipment. You can mold this type of coverage to fit your individual dealership model.
Note that there are four different levels of DOL coverage based off of the degree of protection that your dealership has put in place:
Unprotected lots do not have fencing or barriers to protect your automobile inventory from theft or destruction.
A dealership lot labeled with non-standard protections has been determined to have some sort of shielding barrier. However, not all of the vehicle inventory is safeguarded from potential damage.
Dealership lots with standard protection provide sheltered protection for all of the business’s inventory.
Lots with building protection store all vehicle inventory inside a building at all times. This type of dealership has the lowest level of risk exposure.
Ensure the DOL coverage added covers the maximum monetary value your dealership will have in inventory throughout the policy term. That way, if your dealership lot is blasted with giant hail crystals during a storm for example, you can rest easy. You won’t be out thousands of dollars to fix the dents and scrapes on all of the cars in your lot. The DOL insurance you have in place will cover all of the incurred restoration costs.
False Pretense Coverage
False pretense coverage protects you from financial loss posed to you by fraudsters masquerading as clients or customers.
We all want to believe that the people we work with are trustworthy and act with the best intentions. But every so often you will be confronted with a character or two looking to play you for a fool, especially when you are running a business with highly valued inventory.
It is not uncommon for dealerships to hemorrhage money because a vehicle has been taken in a fraudulent manner. For example, a vehicle is taken for a test drive and never returned, or purchased with a fraudulent check. It is also possible to unintentionally purchase a vehicle from somebody who did not have the legal title for it. Instances such as these are typically not covered by a general liability policy. It is imperative that you add false pretense coverage to your insurance plan so you don’t suffer unnecessary monetary loss at the hands of a crook.
Drive Other Car Coverage
It is standard practice in the industry for dealership employees to drive vehicles provided by their employer. As a dealership proprietor, it is vital that you guarantee insurance coverage for your employees who utilize vehicles owned by your business. Not only will it protect you from a prospective lawsuit, it will also protect the financial well-being of your workers should they happen to get into an accident.
This is where drive other car coverage comes into play. Let’s say you have an employee, Bob, who you’ve provided a dealership vehicle. Bob does not own any other cars, so he does not have personal auto insurance. One day Bob runs to the grocery store and crashes your vehicle into another patron in the parking lot. He is fine, but the man he hit is severely injured and sues Bob for $20,000 in damages. Fortunately, you had the forethought to add drive other car coverage to your commercial auto liability insurance, so Bob is covered under your dealership’s policy. Had drive other car coverage not been added to the dealership’s commercial auto liability insurance, the $20,000 in damages would have had to be paid out of pocket and either Bob or your business would have been held liable.
Adding drive other car insurance is so simple! Take the extra step; it will be sure to safeguard your workers and your company from possible financial obliteration.
Drive Away Collision Coverage
Drive away collision coverage can be added to your commercial auto liability policy. This policy broadens your protection against losses suffered in collisions during transportation from the point of purchase to the destination. Without drive away collision coverage, your dealership is only protected in instances where the distance is less than 50 miles. If the distance traveled is over 50 miles, your collision coverage will not activate – even if the collision happens within the 50-mile threshold.
Once drive away collision coverage is added to your insurance plan, you will have guaranteed collision coverage no matter the distance driven. This will save you hordes of money if an accident were to occur, and provide you with much needed peace of mind.
Business Income and Extra Expense
Business income and extra expense insurance is also known as business interruption coverage. This policy offers monetary protection against a loss of income or profits due to property damage caused by a fire, a natural disaster, theft, or vandalism.
Imagine you pull up to your dealership to see your business has fallen victim to theft and vandalism. Your storefront windows have been smashed in, your vehicle inventory has been bashed to pieces, and there’s even a missing car or two. Chances are, you will have to close shop to recuperate and repair the physical and financial damage done. Meanwhile, you still have bills to pay. How will you continue to pay rent when your business is closed and the flow of income is interrupted? What about your employees – how will you pay them?
That is what business income and extra expense insurance will handle. While your dealership is being renovated, you can rest easy. Your rent payments will be made, your payroll distributed, and taxes and other bills will be paid on time.
Some business policies even provide additional protection like extended business income coverage. This policy helps replace the loss of income while your business is trying to get back up and running.
How We Can Help
There is no “one size fits all” insurance policy. The auto dealership coverages that your business requires will be unique to you. To make sure you have adequate auto dealership coverages that meet your individual needs, schedule a meeting to review your policy with us at Camargo today.