California Auto Dealer Insurance FAQ

After working in the California Used Car Dealer Insurance space for 20+ years, I gained supreme insights that I’ll share here with my auto dealer friends across the country. YCDB is giving back by providing this Dealer Insurance FAQ for you.

Used Auto Dealer Insurance FAQ

Used Car Dealer Question: Do I need dealer insurance to get or keep my California DMV dealer license? Also, does this rule apply the same to wholesale and retail auto dealers?

YCDB’s Answer: The California DMV does not require proof of insurance to get or keep your used car dealer license. Although this seems crazy, it’s absolutely correct and this applies the same for auto brokers, wholesalers, and retail car dealers. 

With that in mind, satisfying landlords, auctions, and lenders are usually the reason dealers get insurance. The risk of getting pulled over and having uncovered claims rounds typically rounds out the out the reasons that most dealers get insurance but none of them include a mandate by the California Department of Motor Vehicles. 

 

 

 

 

Used Car Dealer Insurance FAQ for Advanced Dealers!

Car Dealer Question: What does symbol 21 mean on your dealer insurance policy?
YCDB’s Answer: Any auto. Don’t be confused about this definition. Quite a few Dealer Insurance Policies over the years have written their Liability Coverage on a Symbol 21 basis. This is true over a 15-year span, standard or non-standard insurance programs, whether the insurance contracts were written on proprietary or ISO forms *, by admitted or non-admitted insurance carriers.

The trick here is diving into the Insuring Agreement and the Exclusion sections that are applicable to this coverage. These sections will isolate scenarios in which the carrier is trying to either limit or eliminate coverage altogether. Be mindful of the language in these sections of your insurance contract which is sent to you annually with your Declarations Page(s).

 

An insider tip for my car dealer friends out there…

ask your insurance agent to get you a copy of that insurance contract in electronic format. Most carriers will print the contracts in a super small font which makes finding details and important language more difficult for the consumer. 

* ISO Forms are the insurance industry standard regardless if you are an insurance carrier that sells home-owner insurance or Car Dealer Insurance. ISO is a subscription-based service that insurance companies use to offer their insurance contracts on and then they add some slight tweaks based on their experience and risk tolerance.

 

Car Dealer Question: Why does my dealership policy need an aggregate limit on the dealers physical damage collision deductible?

YCDB’s Answer: In rare instances, collision losses affect more than one dealership vehicle at the same time.
i.e. – Let’s say a motorist loses control of their vehicle in front of your dealership and collides with three or four dealership vehicles. With the aggregate deductible in place, it limits the amount a dealer pays in out-of-pocket deductible expenses for the loss.”

 

Car Dealer Question: How can I limit my risk exposures?

YCDB’s Answer: We assist each of our insured’s with a loss control survey in order to minimize or remove risk exposures.

 


If you got something out of this insurance page, you will love the California Used Car Dealer Insurance Buyer’s Guide. Here’s a link to that dynamic content that Mike Ramos wrote a few couple month ago so the information is super relevant for auto dealers!


What Is a Service Contract specifically for Used Car Dealers?

A service contract is defined by the National Association of Insurance Commissioner’s Service Contracts Model Act as “a contract or agreement for a separately stated consideration or for a specific duration to perform the repair, replacement, or maintenance of property for the operational. This also includes structural failure of any motor vehicle, residential or other property due to a defect in materials, workmanship, or normal wear and tear.”

Said another way, a service contract provides coverage to a consumer when a covered product (e.g., an automobile, television, or refrigerator) fails to perform as originally intended. For example, a car may break down, wear out, or simply stop functioning due to a defective part. While there may be other coverage terms, conditions, and limitations that may apply, at its core, this is the basic concept of a service contract.

Are Service Contracts and Extended Warranties the same?

Service contracts are frequently referred to as “extended warranties” because they can extend the manufacturer’s warranty for a specified period of time. One of the key differences between a warranty (provided by the manufacturer, retailer, or other entity in the product’s chain of distribution) and service contract is that a consumer must pay an additional sum of money for the service contract instead of having the cost be included in the purchase price of the covered product.

 

The source of this fantastic detail above regarding Extended Service Contracts are the good folks at IRMI. Check the full link if you have a few minutes if you would like more details on the inner workings of the Extended Service Contracts.

https://www.irmi.com/articles/expert-commentary/auto-service-contract

They even have a well-written section on the differences between service contracts and traditional insurance, which is a super common question amongst car dealers regardless of industry experience.


The YCDB Quicktips Series can turn your dealership around. Read our Auto Dealer Insurance FAQ section today!

 

This “insider info” could not be gained by working for an insurance agency for 20 years! My experience is working for an A-Rated nationwide insurance carrier.


YCDB Headquarters:

Your Car Dealer Bond is here to help in any way we can from offering you super low rates on your $10,000 or $50,000 surety bond. We can also help you develop your dealer brand by creating you a stunning logo or professional business cards for your dealership.

Give YCDB the chance to earn your business right now. We have super reasonable rates and I have been writing for mom and pop dealers and $300,000,000 insurance carriers for more than 22 years. Heck I even used to write telemarketing scripts in my prior life back when Glenn Ivy was blowing up!

Give us a shout today and let us help you out. 866-357-4405 and ask for Mike Ramos or click this link to be escorted to our contact us page.


Used Auto Dealer Tip

Be careful if you are selling service contracts (also known as extended warranties) because the potential upside may be more than offset if things go wrong.  Over the past 15+ years, service contracts providers of all sizes have had issues staying in business. There are also a fair amount of these service contract companies that have been formed in Turks and Caicos and other off-shore outlets that have less oversight.

Customer Service