Automotive Sales And Service Insurance FAQ. Automotive sales and service is a broad category filled with a variety of operations involving the sales, service, parking, storing and rental of automobiles, trucks and recreational vehicles.
The auto category presents a considerable number of exposures that center around the automobile:
Liability insurance for these operations is a major consideration but property insurance is equally important.
Property of others while in the care, custody and control of the insured must also be protected. The property exposure can be extensive.
We wanted to provide a deeper dive into small business insurance to help our readers get a better understand of the commercial insurance policies they want and need with the Automotive Sales And Service Insurance FAQ.
Read the Automotive Sales And Service Insurance FAQ to learn what type of commercial insurance coverages are right for your auto business - including liability, property, workers compensation and other specialty policies.
According to Wikipedia, "The automotive industry is a wide range of companies and organizations involved in the design, development, manufacturing, marketing, and selling of motor vehicles.."
Automotive Sales And Service include - but are not limited to - the following types of businesses:
You can reference the Insurance Definitions, Dictionary And Glossary to better understand the commercial insurance policy terms and language used in our Small Business Insurance FAQs.
Following are some suggested commercial policies and coverages applicable for auto related businesses:
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:
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:
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:
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:
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:
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:
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:
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:
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:
Larger automotive dealerships may own or lease aircraft as part of their operations when a number of dealerships are located over a large geographic area or are located in communities that are difficult to access. Aviation coverage is needed in these cases because coverage for the aircraft exposure is excluded in most liability forms and policies.
Types Of Aviation Coverages:
Automotive sales and service operations located near larger inland bodies of water or in coastal areas may own or lease boats or yachts in order to entertain customers and/or employees. Ocean marine coverage is needed in these cases, because most policies do not cover boat or yacht exposures.
Types Of Ocean Marine Coverages:
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:
There are many commercial insurance policies available for Automotive Sales And Service. To find out what types of coverage your business needs, speak to a professional insurance broker with experience in insuring auto businesses.
Learn about the coverages available for specific industires with the Insurance FAQs below: