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Jennifer  Livingston

Jennifer Livingston Consultant

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What Your Dealership Should Look for in Insurance Coverage

When a person decides to start a car dealership, insurance needs to be part of their planning. It is a requirement for a dealership to have vehicle insurance. It is to their benefit to have an insurance product designed to cover each of their vehicles as well as the business. A dealership having protection for their vehicles against potential accidents, theft as well as vandalism and more is essential.


Dealership Physical Damage Coverage

This is designed to provide a car dealership protection for trailers and any type of vehicle a dealership has in its possession to sell. It's possible to have such coverage extended to protect other types of land motor vehicles. This could include scooters, golf carts as well as construction equipment and more. Vehicles on a dealership lot that may be there for consignment as well as a floor plan may also be covered. The declaration section of the insurance policy will identify the classes of vehicles that will be provided coverage.


Garage Liability Insurance

This is insurance designed to cover the legal liability for car dealerships with claims of bodily injury. It can also provide protection against property damage that occurs during business operations. There are two parts to this type of insurance. A dealership must list in the policy who is insured. They must also choose a limit for the insurance. This will involve a provision in the policy to protect against any and all legal issues involving garage operations. It should include the maintenance, ownership as well as operation of the vehicles when in a dealership's garage and more.


False Pretense Coverage

The cheapest car insurance product can provide effective protection for a car dealership who loses a vehicle because of a scheme, trick or false pretense. This coverage is important because when a car dealership voluntary parts with a vehicle in this way; it is not considered a form of theft. In this situation, the dealership has voluntarily given a vehicle to a person for a false reason. This coverage often protects a car dealership when a person takes a vehicle for a test drive and does not return the vehicle. False Pretense Coverage can protect a car dealership in various scenarios.


Dealers Open Lot Coverage

This is often referred to as auto physical damage coverage. It is designed to provide coverage for any physical damage that occurs to vehicles owned by a car dealership. This type of insurance product acknowledges that car dealerships are a unique business. It is designed to cover the risks involved with a dealership having vehicles on an open lot. This coverage can be for passenger vehicles, RV units and more. It will cover used, new service as well as demonstrator vehicles. Most insurance companies will require a dealership to insure the entire value of their inventory.


Reporting Form

This requires an insured dealership to file a report with the insurance company showing their inventory values on a regular basis. Most insurance companies require it to be done within 15 days from the end of a reporting period. This can be once a month or once a quarter. A dealership could be penalized if it neglects to submit reports as required. A penalty could be payment of only 75 percent paid for a loss. It won't matter the limit shown on a policy's declaration page.


Non-Reporting Form

This requires a dealership to submit to the insurance company the maximum value of all vehicles located on their property at any one time during the term of the policy. If a dealership gives an insurance company a lower value than what is actually of their premises: they could be penalized.


A car dealership needs to purchase insurance specifically designed to provide protection for the risks associated with having a car lot. This is essential because these insurance policies are created to meet the unique needs of those in the auto dealership industry.


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