How much does the car dealer insurance cost in California?
There is no fixed cost for getting your California auto dealer insurance. Instead, the cost is determined by a number of different factors, including who your provider is. The factors and risks that are considered by your insurance carrier include:
- The types of coverages that you wish to include in your policy, and the amount of coverage you are requesting
- The size of your company, the number of its employees, and their roles in the company
- The location of your business
- The value of your inventory
- The maximum pick-up/delivery distance (more or less than 200 miles)
- Your experience in the garage automotive industry and your experience as a business owner
- Your prior insurance history as well as your claims history
All of these taken together make up the cost of your California used car dealer insurance policy.
How to get insurance for your auto dealership in California
To get California car dealer insurance, you will need to fill out and submit our online insurance application form. We will then contact our providers to seek out the best possible rate for you. We will get back to you shortly with your free quote.
Want to find out how much your premium will be? Request a quote and let’s get started!
Car dealer insurance requirements in California
The state of California does not require used car dealers to obtain insurance. However, two important caveats apply here! Vehicles that are driven on public roads must be insured. Moreover, any personal auto insurance coverage does not apply to vehicles that are purchased by a car dealer business.
For these reasons, it is a good idea to get insurance even though the state does not require it. Dealers frequently also get insurance in order to meet the requirements of landlords, auctions, and lenders, or to minimize the risk of getting pulled over and having uncovered claims.
To become a car dealer, you must apply at the California Department of Motor Vehicles and complete the licensing requirements, such as getting a California auto dealer bond.
Types of insurance and coverage
In total, there are over 15 types of coverages that can be included in your California car dealer insurance policy. The most common types of coverage include:
- Inventory coverage - includes the purchase price and the reconditioning on the cars that you buy from other dealers. It does not include the profit you expect to make from selling a vehicle.
- Garage liability coverage - applies to property damages or bodily injuries that are sustained by a third party as a result of the operations of your auto garage operation or while they are using your insured vehicles.
- Garagekeepers coverage - designed to protect against claims arising from 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.
- Medical payments coverage - can cover any 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 customer’s trip or fall.
- Scheduled vehicle coverage - supplies liability and physical damage coverage to vehicles specifically listed on your policy. This coverage should be considered when a vehicle is owned by you or your spouse, rather than in the business name. In many cases, it makes good business sense to dissolve your personal lines auto insurance policy and obtain insurance on the personal exposures under your car dealer policy. This may result in having more coverage for less money.
- Contents coverage - provides replacement costs for your personal property, including leased business personal property for which you are contractually responsible, in the event of a fire, burglary, vandalism, and collapse. Examples of personal property include computers, tools, furniture, fixtures, machinery, and other equipment.
On top of the above, there are several other coverages that are taken up less frequently but are still worth considering. These include:
- Damage to rented premises coverage (DTRP) - also known as Fire Legal Liability, this coverage provides liability for property damage caused by a fire to premises leased or rented to you and arising out of your own negligence.
- Broad form drive other car coverage - for businesses not individually owned, this coverage may be used to extend the garage policy to provide insurance for partners or corporate officers who do not carry their personal auto policy when borrowing or renting cars in their name. The individuals named in the endorsement become insureds while using autos they do not own.
- Broad form products - provides coverage for property damage to its product(s) even if the resulting damage was caused by a defect existing in the product at the time of customer purchase.
- False pretense coverage - coverage provided if the insured is tricked or schemed into voluntarily parting with a covered auto or the insured acquires an auto from a seller who did not have legal title