The next used car dealer category that we see only purchases the mandatory coverage from their lender (like Nextgear).
After 20 years in the industry, Mike Ramos, president and founder of Your Car Dealer Bond LLC has even more insight to offer about this subject matter…
Then there are other dealers who go without insurance altogether because you’re not mandated to have insurance in California to keep your car dealer license and because they don’t use a lender at all.
Whichever category you fall into, we can help because we have helped thousands of other dealers just like you craft just the right insurance policy to stay within budget and provide them with peace of mind!
If you are a newly-licensed auto dealer (i.e. dealers in business less than 36 months), expect a surcharge. Generally, a resume or experience questionnaire substantiating your level of experience is how an insurance company might gauge how much that surcharge should be. In addition to industry experience, the insurance companies ask how much capital has been invested and other info that would typically be contained in a business plan.
New Ventures will typically be surcharged 10 – 20%, depending on the rating plan of your insurance carrier. It makes sense since this segment of the industry creates the most insurance dealer policy claims.
Loss runs are free of charge and they are reports provided by your insurance company that certify the claim activity on each of your policies.
Assuming that you have not had any claims in the past 3 years, your premium will be quite a bit less than if you do not have your Loss Runs handy.
1. Inventory Coverage – Includes purchase price and the reconditioning on your autos, but does not include expected profit. Example:
* It does not matter how much you were planning on selling that vehicle for since your “expected profit” is not covered.
2. Why every dealer needs Garagekeepers Coverage?
Garagekeepers Coverage is designed to protect you against claims arising out of physical damage to vehicles owned by others that are left in your care, custody, or control. This includes vehicles that are being serviced, repaired, stored, and test-driven.
3. How Medical Payments Coverage is useful even if I have medical insurance?
Medical Payments Coverage covers medical expenses sustained by you and/or your passengers if involved in an accident in a Covered Auto. It can also be used for small claims on your premises such as a trip and fall by a customer.
4. What is Scheduled Vehicle Coverage & why would I purchase it?
Scheduled Vehicle Coverage provides Liability and Physical Damage Coverage to vehicles specifically listed on your policy. This coverage should be considered when you own a personal vehicle in yours or your spouse’s personal name, rather than the business name.
In most cases, it makes most sense to dissolve your personal lines auto insurance policy that you carry through Geico or Progressive. Insuring those personal exposures under your car dealer policy can result in having more coverage for less money. The icing on the cake is being able to write off the cost as a legitimate business expense.
5. What is Contents Coverage & why would I purchase it?
Contents Coverage provides replacement cost for your personal property, including leased business personal property you have a contractual responsibility to insure in the event of a fire, burglary, vandalism, and collapse. Consider your computers, tools, furniture, fixtures, machinery and equipment.
Also known as a loss control or a loss prevention inspection. These in-depth inspections are scheduled and conducted generally within 30 days from your dealer insurance policy effective date. Inspectors write up an extensive report about your dealership and report back to the insurance company. The insurance company then compares the report to what’s disclosed on your application and looks for hazards threatening your business.
Inspections can help you save money on your dealership insurance and keep you and your employees safe. The fewer hazards you have that threaten your business, the less risky you are to the insurance company, which means your premiums should not be increased upon this inspection. Remember, an inspection of your business for insurance purposes is nothing to be nervous about. If an inspector finds something that you need to fix to maintain your insurance rates, you’ll be given plenty of time to do so before any action is taken.
Used cars advertised as “certified” must meet specific requirements. The dealer must perform a complete inspection of the vehicle and provide consumers with a copy of the inspection report.
Dealers are prohibited from advertising a vehicle as “certified” if the:
When possible, attempt to resolve the problem with the other party or firm. If unable to obtain a resolution, consider contacting a private attorney, the small claims division of your local county court, and a legal aid group for assistance. Refer to the County Government section of your local telephone directory for the county court in your area.
Most producers do not specialize in Used Car Dealership Insurance nor have access to companies who write this insurance line. It is imperative you search around to find one who not only is knowledgeable with this product, but that is also prepared to build a policy that is specifically for your dealerships needs.
Experience matters and you get what you pay for when it comes to finding the most knowledgeable insurance producers to insurance your dealership needs. Deductibles, sub-limits, minimum limits, aggregate exposure, total insured value, prior damage. These are just a few of the most common terms that a well-informed insurance producer will understand and be able to explain to you in plain terms. If you are going to spend thousands of dollars on insurance every year, you should be getting your money’s worth!
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