Car Dealership Business Insurance

Every car dealership business needs insurance. Knowing which type of insurance you need and the best place to get it is the next step.

This article will cover the main types of business insurance and help you find the best car dealership business insurance.

Recommended: Next Insurance is dedicated to matching small businesses with the right policy at the best price.

Best Insurance for a Car Dealership Business

The most common and comprehensive type of car dealership business insurance is general liability insurance. We recommend general liability insurance as your first line of defense against a variety of the most general and commonly occurring claims.

Some of the risks general liability insurance covers are:

  • Bodily injury
  • Property damage
  • Medical payments
  • Legal defense and judgment
  • Personal and advertising injury

While a car dealership business isn’t legally required to carry general liability insurance, operating without it is extremely risky. If your car dealership business is sued, you could face fees totaling hundreds of thousands of dollars (or more).

Find the Right Policy at the Best Rate

Using a fully online insurance provider saves time and money and offers the most accurate quotes.

Get an Online Quote

Cost of General Liability Insurance

The average car dealership in America spends between $450-$1,000 per year for $1 million in general liability coverage.

Compare the average cost of general liability insurance for a car dealership business to other professional industries using the graph below:

Graph showing average price of general liability insurance prices per industry

Several factors will determine the price of your policy. These include your:

  • Location
  • Deductible
  • Number of employees
  • Per-occurrence limit
  • General aggregate limit

You may be able to acquire general liability insurance at a discounted rate by purchasing it as part of a business owner’s policy (BOP) rather than as a standalone policy.

A BOP is a more comprehensive solution that includes multiple forms of coverage, such as business interruption and property insurance.

Start an Online Quote for Insurance

Finding the most affordable premium starts with getting accurate quotes from highly rated providers.

Common Situations That General Liability Insurance May Cover for a Car Dealership Business

Example 1:  A customer is walking across the lot and does not see an obstacle. He falls and breaks his arm. Your general liability insurance policy will pay for the medical treatment for his injuries so your company does not have to.

Example 2:  An employee is moving a car from one area of the lot to another when he accidentally hits a customer who is car shopping. Although the speed of the vehicle was not high, it still causes the customer significant injuries both from the impact with the car and the impact with the ground. The customer files a lawsuit against your business. Your general liability insurance policy will cover the fees associated with the lawsuit, including a settlement if the case is settled out of court.

Example 3:  The new advertising campaign you paid for goes after the competition pretty fiercely, which causes your competitor to sue your business for libel. The general liability insurance policy you carry will pay for your legal costs whether you win or lose the case. It will also pay for a settlement if you settle the case outside of court.

Check out our review of the Best Small Business Insurance Companies.

Other Types of Coverage Car Dealership Businesses Need

While general liability is the most important type of insurance to have, there are several other forms of coverage you should be aware of. Below are some other types of insurance all car dealerships should obtain:

Commercial Property Insurance

The value of your commercial property is substantial. If an unexpected disaster occurs, such as a major storm or fire, and that disaster destroys some or all of your automobiles, it may be enough to put you out of business. As the owner of a car dealership, you should carry commercial property insurance with limits high enough to account for the high value of your inventory.

Workers’ Compensation Insurance

Carrying workers’ comp insurance is an important part of being an employer, and most states legally require it. Not only does carrying this insurance keep you in legal compliance, but it also ensures that your employees can get the medical care they need for any job-related injuries. Your workers’ comp policy will cover both medical care and lost wages if employees are unable to work due to their injuries.

Commercial Umbrella Insurance

Commercial umbrella insurance sits on top of a general liability insurance policy, picking up where the limits of the general liability policy left off. In a situation where your general liability policy limits are exceeded, such as if you lose a major lawsuit, you can depend on the umbrella policy to take over and pay the damages until the limits of the umbrella policy are reached.

Business Interruption Insurance

If a major event causes your business to shut down for a period of time—like after a tornado or other major disaster—then business interruption insurance would help to cover your business expenses and potential lost income during the downtime.

Additional Steps To Protect Your Business

Although it’s easy (and essential) to invest in business insurance, it shouldn’t be your only defense.

Here are several things you can do to better protect your car dealership business:

  • Use legally robust contracts and other business documents. (We offer free templates for some of the most common legal forms.)
  • Set up an LLC or corporation to protect your personal assets. (Visit our step-by-step guides to learn how to form an LLC or corporation in your state.)
  • Stay up to date with business licensing.
  • Maintain your corporate veil.

Business Insurance Is the Best Way to Protect Your Business

If you're starting a new business, then you need business insurance. It's as simple as that. The protection offered by an LLC will protect your personal assets, but your business's assets are still open to liability in the case of a lawsuit or other loss.

Be sure that everything you've built is safe by getting business insurance.

Get a Free Quote

Car Dealership Business Insurance FAQ

Can I buy business insurance online for my car dealership business?

Yes, absolutely. You will need to first get a quote from an online business insurance provider like Next Insurance. Next allows you to then purchase a policy immediately and your coverage will be active within 48 hours.

What is included in a business owner’s policy?

A typical business owner’s policy includes general liability, business interruption, and commercial property insurance. However, BOPs are often customizable, so your agent may recommend adding professional liability, commercial auto, or other types of coverage to your package depending on your company’s needs.

What is the difference between business insurance and general liability insurance?

"Business insurance" is a generic term used to describe many different types of coverage a business may need. General liability insurance, on the other hand, is a specific type of coverage that business owners need to protect their assets.

Do I need insurance before I start a car dealership business?

You should invest in business insurance coverage for your business before your first interaction with a customer. Although the cost of insurance may seem high for a brand new business, it’s best to be proactive when it comes to protecting your assets. After all, you can’t buy insurance to cover a loss that has already occurred.

Will insurance protect my car dealership business from everything?

Not necessarily. Certain exceptions may be written directly into your car dealership business insurance policy, and some perils may be entirely uninsurable.

Is general liability the same as business owners?

A general liability insurance policy covers only liability losses. A business owner's policy covers both liability and property losses.

How do I choose the best general liability insurance?

The best general liability coverage for your business really depends on the amount of coverage you’re comfortable with and how often you expect to file a claim. A relatively safe business with a very low risk of accident or legal liability could opt for lower premiums with higher deductibles. 

However, if you are in an accident or injury-prone industry or are making advertising claims about the effectiveness of your service or product, you may wish to consider more extensive coverage. We recommend using a digital insurance provider like Next Insurance.

Do I need business insurance if I already have an LLC?

Yes, an LLC is meant to create a legal barrier between your business and your personal assets and credit. If you haven’t formed an LLC yet, use our Form an LLC guide to get started.

An LLC doesn’t protect your business assets from lawsuits and liability– that’s where business insurance comes in. Business insurance helps protect your business from liability and risk.

Related Articles