Automotive Sales And Service Insurance FAQ

• At the minimum, automotive sales and service businesses need general liability insurance.
• If they have employees they will need workers compensation in most states.
• If they have vehicles registered to the business, or use vehicles for the business purposes, they will also need commercial auto.
• There are also other specialty coverages and endorsements that might be needed based on their operations.

Package policies should always be considered because of the convenience of having multiple coverages included in a single policy. The businessowners is the preferable product for many retail operations, but most automotive sales and service operations do not qualify for it.

A few insurance companies permit automobile coverages to be included in the package but most still require automobile-related coverages be written as separate or monoline policies. While an auto exposure can be added to the package, it cannot receive any package discount.

Types Of Automotive Sales And Service Package Policies:

• Businessowners Policy (BOP)
• Commercial Package Policy (CPP)

Automobiles and their parts and accessories represent the primary items of personal property needing coverage. Many automotive businesses do not own the buildings they occupy but do have long-term leases and have invested money in improvements and betterments to those buildings, such as hoists and lifts.

A comprehensive property inventory will help to identify if the property is building, business personal property or improvements and betterments. Fire caused by flammable liquids and theft of valuable inventory are the two very important and common causes of loss that must be covered.

Time element coverage should not be overlooked. Business income from dependent and secondary dependent properties is particularly important for those automotive sales and service businesses that depend upon only a limited number of suppliers and/or customers.

Types Of Property Coverages:

• Building
• Business Personal Property
• Personal Property of Others
• Improvements and Betterments

Inland marine forms often provide superior coverage to properly coverages forms because of transit and off-premises coverages and broader perils. Specifically, the electronic data processing (EDP) coverage forms should be considered to property cover the diagnostic equipment and other computer-based property.

A scheduled property coverage form might be considered for property frequently moved to and from off-site locations. Whenever an inland marine coverage form is used for a particular property item, business personal property limits should be reduced in order to eliminate duplicate premium charges.

The inland marine perils or causes of loss are generally equal to or better than the special causes of loss form that applies to property coverage. Most inland marine forms include earthquake and flood coverage.

Types Of Inland Marine Coverages:

• Accounts Receivable Coverage
• Contractors' Equipment Coverage
• Difference in Conditions (DIC) Coverage
• Electronic Data Processing Equipment Coverage
• Equipment Dealers Coverage
• Fine Arts
• Floor Plan Coverage
• Motor Truck Cargo Legal Liability Coverage
• Scheduled Property
• Signs Coverage
• Transportation Coverage
• Valuable Papers and Records Coverage

A number of coverages are available under the commercial crime coverage form and policy. While all the coverages may be appropriate for a given automotive sales or service operation, employee theft coverage should always be at the top of the list.

Inside the premises-theft of other property coverage may be a cost effective way to cover theft of inventory because there is no coinsurance clause. As a result, the insured can choose a specific coverage limit instead of taking a required higher limit under a business personal property form with special causes of loss coverage for considerably higher premiums.

Types Of Crime Coverages:

• Computer and Funds Transfer Fraud Coverage
• Employee Theft Coverage
• Forgery or Alteration Coverage
• Inside The Premises-Robbery or Safe Burglary of Other Property Coverage
• Inside The Premises-Theft of Money and Securities Coverage
• Money Orders and Counterfeit Money Coverage
• Outside The Premises Coverage

Surety bonds are used to guarantee a promise that one party makes to another. If the promise is broken, the surety provider compensates the injured party and then seeks restitution against the party who broke the promise.

Automotive sales and service operations frequently promise to supply services or products. In cases where the promise is made to a government agency, a surety bond is often required. In a similar way, a government agency will require a license or permit bond from the automotive business before issuing it a license or permit to operate.

Types Of Surety Coverages:

• Bid Bond
• Contract-Performance of Service or Supply Bonds
• License and Permit Bonds

Automotive sales and service operations use commercial general liability coverage forms to provide protection from third-party lawsuits as a result of the operations of the business. Automobile dealerships normally use an auto dealers coverage form to provide this protection.

Types Of Liability Coverages:

• Commercial General Liability (CGL) Coverage
• Employee Benefits Liability Coverage
• Employment-Related Practices Coverage
• Owners and Contractors Protective (OCP) Liability Coverage

Automobile dealerships use an auto dealers coverage form to insure both automobile and general liability exposures. Other types of automobile sales and service entities will use the general liability coverage for the operations coverage and automobile coverage forms for auto-related exposures including damage to customer's vehicles.

Types Of Business Auto Coverages:

• Auto Dealers Coverage
• Auto Medical Payments
• Business Auto Coverage
• Collision Coverage
• Comprehensive Coverage
• Garagekeepers Coverage
• Hired & Non-owned Auto Coverage (HNOA)
• Leasing or Rental Concerns-Contingent Coverage
• Leasing or Rental Concerns-Conversion, Embezzlement, or Secretion Coverage
• Single Interest Insurance Coverage
• Uninsured/Underinsured Motorists Coverage

By law, employers are required to provide coverage for injuries sustained by their employees while on the job. Most employers purchase workers compensation policy to satisfy this requirement, but it is not the only option. An automotive sales and services operation with employees must purchase the necessary coverage.

Remember, if the business hires an individual and calls that individual a subcontractor, doing so is not a shield if it is later determined that the individual is, in fact, an employee.

Types Of Workers Comp Coverages:

• Excess Workers Compensation Self-Insurance Bonds
• Stop-Gap or Employers Liability Coverage
• Voluntary Compensation Coverage
• Workers Compensation and Employers Liability Coverage

Motor vehicles can cause considerable injury or damage to both people and property. Because it is not readily predictable who may be injured or what may be damaged, higher insurance coverage limits are very important to all businesses in the automotive sales and service category.

Types Of Excess Liability Coverages:

• Excess Liability Coverage
• Umbrella Coverage

As automotive sales and service businesses grow larger, they may intentionally or unintentionally take on additional exposures not covered by most standard insurance forms. The following coverages may apply to these businesses.

Types Of Specialty Coverages:

• Business Legal Expense Coverage
• Cyber Liability Coverage
• Directors and Officers Liability Coverage
• Environmental Impairment Liability Coverage
• Export Credit Insurance Coverage
• Fiduciary Liability (Pension, Welfare and Employee Benefit Funds) Coverage
• Identity Theft Insurance Coverage
• International Insurance Coverage
• Risk Retention Group Liability Coverage
• Solar Energy System Coverage
• Tax Liability Coverage
• Underground Storage Tank (UST) Liability Coverage
• Unmanned Aerial Vehicles (UAV) (Drones)
• Weather Coverage