Why Used Car Dealers Need Commercial Auto Insurance

If you run a car dealership, your business is vehicles. You know that you need the appropriate insurance to cover your operations. One of the most-necessary is (obviously, perhaps) commercial auto insurance. When you drive on behalf of your company, you’ll need this coverage.

Commercial Driving Risks

Any business’s cars face risks of damage or loss from accidents, theft or other hazards. By having the appropriate coverage, you can get on with business without having to deal with ongoing ramifications.

Still, as a used car dealer, getting car insurance is not just a matter of buying any policy. Personal car insurance won’t cover vehicles used for business. That’s why you’ll at least need commercial auto insurance. However, you will probably have to get it in a different way from other businesses.

Getting the Right Coverage

When it comes to commercial auto insurance for car dealers, you’ll probably have to get coverage in a couple of ways.

First, you’ll likely need dealer’s open lot coverage. This is the coverage that will apply to the vehicles on your lot that you are trying to sell. It usually includes two types of coverage called collision and comprehensive insurance.

• Collision insurance pays for a vehicle damaged in a wreck or other collision. The coverage can apply when it’s driven by both employees (for business or personal use) and test drivers.

• Comprehensive coverage pays for a vehicle damaged by accidents other than collisions. It might cover vehicle damage and losses from fires, hail, vandalism, theft and more.

However, open lot coverage only covers physical damage. You’ll probably need additional coverage like:

• Auto liability insurance: Liability coverage allows a driver to pay for the damage they cause other parties if they (the insured driver) are at-fault for a wreck. Most dealerships get this coverage through garage liability insurance, which covers not only driving risks, but also general liabilities within commercial properties.

• Uninsured/underinsured motorist coverage: Another driver might damage one of your lot’s vehicles. This coverage can help you pay for the damage costs on your own, if the other driver does not have appropriate liability insurance to do so.

Other coverage, like medical payments coverage might also be available.

Sometimes, you might need a separate commercial auto policy in addition to garage liability and dealer’s open lot coverage. It might depend on who exactly owns the vehicles on your lot. Company- and employee-owned vehicles might need commercial auto policies when you use them for business. So, talk to your agent about the best way to structure your dealership’s insurance portfolio.