Automotive Sales And Service Insurance FAQ

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Automotive Sales And Service Insurance FAQ Information

Automotive Sales And Service Insurance FAQ

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.

What Is An Automotive Business?

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:

  • Automobile Dealers
  • Automobile Dismantling
  • Automobile Rentals
  • Automobile Repairs
  • Automobile Sales and Service
  • Automotive Accessories
  • Automotive Glass Repairs
  • Batteries
  • Car Washing
  • Farm Equipment Dealers
  • Filling Stations
  • Garages
  • Gasoline Stations
  • Motorcycle Dealers
  • Painting (Automobile)
  • Recreational Vehicle Dealers
  • Snowmobile Dealers
  • Tire and Battery Shops
  • Truck Rentals
  • Used Car Lots

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.

What Kinds Of Insurance Do Automotive Sales And Service Businesses Need?


  • 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.

Following are some suggested commercial policies and coverages applicable for automotive sales and service businesses:

You can skip to the following types of automotive sales and service businesses small business insurance policy coverage types using these links:


Automotive Sales And Service Businesses Commercial Insurance Policies:


What Kinds Of Commercial Package Policies Do Automotive Sales And Service Businesses Need?

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)

What Kinds Of Commercial Property Insurance Do Automotive Sales And Service Businesses Need?

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

What Kinds Of Inland Marine Insurance Do Automotive Sales And Service Businesses Need?

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

What Kinds Of Crime Insurance Do Automotive Sales And Service Businesses Need?

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

What Kinds Of Surety Coverage Do Automotive Sales And Service Businesses Need?

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

What Kinds Of Commercial Liability Insurance Do Automotive Sales And Service Businesses Need?

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

What Kinds Of Commercial Auto Insurance Do Automotive Sales And Service Businesses Need?

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

What Kinds Of Workers Compensation Insurance Do Automotive Sales And Service Businesses Need?

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

What Kinds Of Excess And Umberlla Insurance Do Automotive Sales And Service Businesses Need?

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

What Kinds Of Specialty Insurance Do Automotive Sales And Service Businesses Need?

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

Automotive Sales And Service Insurance FAQ - The Bottom Line

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.

Frequently Asked Questions By Industry

Learn about the coverages available for specific industires with the Insurance FAQs below:

Automotive Sales And Service Insurance FAQ
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