Tennessee Used Car Dealer Insurance Policy Information
Tennessee Used Car Dealer Insurance. Selling pre-owned vehicles can prove to be a lucrative venture. However, as the owner and operator of a used car dealership, you are financially responsible for any issues that may arise.
To protect yourself from significant losses, investing in the right type of Tennessee used car dealer insurance is an absolute must.
Used automobile dealers sell used vehicles accepted as trade-ins from customers or purchased from automobile auctions. They often provide financing and insurance for vehicle purchasers.
Some sell auto parts and accessories, provide auto repair facilities, body shops, and offer vehicle rental and leasing. Most vehicles are stored in open lots.
Why is insurance important for used car dealers? What type of insurance do you need? Below, you'll find the answers to these questions so that you can make sure you're properly protected.
Tennessee used car dealer insurance protects your dealership from lawsuits with rates as low as $77/mo. Get a fast quote and your certificate of insurance now.
Why Do Used Car Dealers Need Insurance?
As a TN used car dealer, you are legally responsible for your commercial facility, the vehicles on your lot, the safety and well-being of your employees, and so much more. Though you make every effort to ensure that everything runs smoothly and is properly taken care of, you never know when a mishap can occur.
A customer could slip and fall while walking through your lot and sue you for damages. An employee could sustain an injury while they're on the job. Your dealership could be vandalized or robbed. Those are just a few examples of the issues that could arise, and the financial cost to you could be astronomical.
To avoid having to pay for such expenses out of your own pocket, you need to have the right type of Tennessee used car dealer insurance. If a mishap does occur, instead of paying the expenses yourself, your insurance company will cover the cost.
Having the right type of business insurance isn't only important from a financial standpoint; you're also legally required to carry certain types of coverage. If you fail to have the policies you need, you could be looking at serious fines and could potentially even lose your used car business.
What Type Of Insurance Do Used Car Dealerships Need?
The specific type of coverage a used car dealer will need varies and depends on several different factors. For example, the state your dealership is located in and the types of services you offer will determine the types of coverage you'll need.
With that said, however, there are certain Tennessee used car dealer insurance policies that all used car dealers will need, regardless of their location, size, and the services they provide. Examples include:>
- Dealer's lot insurance - The vehicles on your lot need to be properly covered. Dealer's lot insurance coverage protects the vehicles in your lot from any accidents that they may be involved in. Depending on the specifics of your policy, it may also cover your vehicles from weather-related damages, theft, and vandalism.
- Commercial property - If your TN used car dealership, including the physical structure of your facility is damaged in certain acts of nature, is robbed, or is vandalized, commercial property insurance will help to cover the cost of the damages. This policy covers the physical structure of your dealership and the contents it contains; desks, computers, employees property, etc.
- Commercial general liability - A lot of foot traffic passes through your dealership and mishaps can arise. Commercial general liability insurance provides coverage for third-party personal injury and property damage liability claims. For example, if a customer slips and falls while walking through your lot, suffers an injury, and files a lawsuit against you, this policy will cover the cost of any legal expenses that you may incur, as well as any damages that you may have to pay.
- Workers' compensation - As an employer, you are legally responsible for the safety and well-being of your staff. If an employee suffers a work-related injury that requires medical care and is unable to work while recovering, workers' compensation insurance will cover the cost of their medical expenses, as well as lost wages.
- Errors and omissions - Used car dealers are responsible for protecting their clients' assets. Failure to do so could result in serious financial liability issues. Errors and omissions insurance (E&O) will cover any potential issues that may occur that impact your clients' assets. For example, if an employee makes a mistake while filling out paperwork on a lease contract, and that mistake has a financial impact on a client, E&O will cover the damages - including any legal ramifications.
TN Used Car Dealerships Risks & Exposures
Commercial automobile exposure is high if employees regularly drive a furnished vehicle and if customers are permitted to test drive vehicles. All employee drivers should have valid licenses with their MVRs regularly checked. All vehicles must be regularly maintained with records retained. There should be written procedures for personal and permissive use of vehicles furnished to employees.
For test drives, there must be set procedures, such as salespersons accompanying the customers. In order to prevent the conversion of the vehicles, driver's licenses and other forms of identification should be verified in advance of the customer removing the vehicle from the premises.
Towing presents a more serious exposure due to the potential for damage to the vehicles towed. All tow truck drivers must be experienced. Towing vehicles must be regularly checked, in particular, the hoists and tow bars.
If vehicles are rented to customers, the dealer should keep a copy of the renter's driver's license and proof of insurance. The rental contract should identify all drivers and state that unlisted, unlicensed, or minor drivers are not permitted to operate the vehicle. It should also include a hold-harmless agreement in which renters agree to assume responsibility for the operation of the vehicle to limit the business's exposure to vicarious liability only.
If a collision damage waiver is offered, the customer's signature is needed to document whether this was purchased or declined. The customer should also be required to sign a pre-inspection form to minimize disputes when the vehicle is returned with damages.
Garagekeepers exposure is from damage that can occur to customers' vehicles left with the dealership for servicing or repairs. Keys to customers' vehicles should be kept in a locked box to prevent unauthorized use. Proper identification should be required to prevent handing a customer's car to the wrong owner.
Auto dealers liability exposure is high due to the number of visitors. To prevent slips and falls if there is a showroom, the floor coverings should be in good condition with no frayed or worn spots on the carpet and no cracks or holes in flooring. Steps and uneven floor surfaces should be prominently marked. Sufficient exits must be provided and be well marked, with backup lighting systems in case of power failure. Waiting areas should be provided for customers whose vehicles are being repaired.
Customers should not be permitted access to the service area. Parking lots and sidewalks need to be in good repair with snow and ice removed, and generally level and free of exposure to slips and falls. If the premises is open after dark, there should be adequate lighting and appropriate security for the area. There should be a disaster plan in place for unexpected emergencies. Vehicles in open lots can pose an attractive nuisance. Chains and fences should be in place to prevent entrance to the dealership after hours.
Personal injury exposures include allegations of discrimination, false arrest or detention, unauthorized or intrusive searches, or wrongful ejection from the premises.
Products/completed operations exposures are high due to the selling of used vehicles and repair operations. Compliance with all manufacturers' instructions is critical. There should be a check-off procedure in place prior to the sale or release of vehicles to the customer to prevent its return with any vital functions not working properly.
Environmental impairment exposures can be significant due to the storage of fuel in underground fuel tanks and the disposal of used oils, solvents and other hazardous wastes from service and repair operations. All tanks and pipes, underground or above, must meet state or federal regulations and be routinely tested for leakage. Spillage and leaking of pollutants into the air, ground, or water can result in high cleanup costs and fines. Spill procedures must be in place to prevent the accidental discharge of sludge from water reclamation systems used in washing vehicles. Contracts should be in place to dispose of all environmentally dangerous chemicals. If there are underground storage tanks, a UST policy will be needed.
Property exposure may be limited to a shelter house or trailer with an office or may include a showroom for more expensive vehicles. If there is a garage operation, the exposure increases. Flammable paints, fuels, lubricants, oils, degreasers, and solvents used in the repair operations must be properly labeled, separated, and stored away from combustibles. Spray painting should be done in spray booths with good ventilation, UL-approved wiring and fixture, and adequate controls.
Welding is often a part of the repair and body work operation that needs to be evaluated for proper handling of the tanks and gases. It should be done away from the other operations with either a separate room or flash/welding curtains. Smoking should be prohibited. Poor housekeeping is a serious fire hazard. Unless stored and disposed of properly, oily rags can spontaneously combust and cause a fire. Work areas must be cleaned regularly and trash removed from the building.
Vehicles and auto parts are target items for thieves. Appropriate security controls must be taken including physical barriers such as chains, fences, or gates, lighting to deter access to the premises after hours, and an alarm system that reports directly to a central station or the police department.
Business income and extra expense exposures are high as replacement facilities may not be readily available.
Inland marine exposures are from accounts receivable if the dealership offers credit, computers used to monitor inventory, signs, and valuable papers and records for manufacturers' and customers' information. Backup copies of all records, including computer records, should be made and stored off premises. Vehicles stored in open lots are particularly susceptible to damage by hail, wind, flood, vandalism, and theft. Lots should be well lighted with chains, fences or gates to prevent access and transport. The more expensive models should be moved inside to the showroom if available. An alarm system that reports directly to a central station or the police department should be used. Security guards may be appropriate in some areas.
Crime exposures are from employee dishonesty, forgery or alteration, theft of money and securities, computer fraud, money orders, and counterfeit paper currency. Background checks, including criminal history, should be performed on all employees handling money. Auto sales operations involve a number of transactions and accounts that can be manipulated. There must be a separation of duties between persons handling deposits, billing, ordering, disbursements, and reconciling bank statements. Physical audits should be conducted at least annually. Theft of money and securities prevention requires controls of monies kept in the cash drawers and regular bank drops.
Workers compensation may be limited to an office and road hazards. If there are garage operations, the exposure increases. Used car dealers are more likely than those selling new vehicles to deal with cash transactions, so there is a holdup potential due to cash on hand. Employees must be trained to deal with such situations properly. Employees performing maintenance or repair work on customers' vehicles should be properly trained. Employees can incur injuries from slips, falls, back sprains, strains and hernias, hearing impairment from noise, and foreign objects in the eye.
Welders may suffer burns. Repair areas should be properly ventilated. Proper safety equipment is required. Hoists need to be regularly inspected to prevent vehicles from falling off. The proper use of lifting techniques and of dollies should be encouraged. Safety equipment should be provided. Refueling should be done only in well-ventilated areas to minimize inhaling of fumes. Information regarding chemicals should be available to employees along with early warning signs of problems. Test drives, pickup, and delivery of customers or vehicles can result in injury due to vehicular accidents.
Used Car Dealer Insurance - The Bottom Line
To find out exactly what type of used auto dealership insurance policies you'll need to carry, and how much coverage you need, speak with an experienced agent that specializes in commercial auto dealer insurance.
Tennessee Economic Data & Commercial Insurance Information
If you're a entrepreneur, you need more than just a great products and services and a well-established business model to be a success; you also need to choose the right location for your organization. No matter how awesome your ideas are, if your business isn't located in a place where what you offer will provide value to consumers, you're going to struggle to succeed.
Whether you're thinking about setting up the headquarters of your organization or you're planning on opening a branch of your company in Tennessee, familiarizing yourself with the economic trends and the requirements for commercial insurance in the state is crucial for your success. Below, we offer insights regarding job growth and insurance coverage requirements in The Volunteer State.
Economic Trends For Small Business In Tennessee
In regard to job growth, the state of Tennessee is exceeds the rate of national job growth. As of February 2022, unemployment rates were at a historic low in The Volunteer State, with a rate of 3.2% throughout the state; 0.1% lower than the last historic low of 3.3% in October of 2018. That's lower than the national unemployment rate, which was reported to be 3.8% in February of 2019. Economists are forecasting continued job growth throughout the state into 2022.
In addition to positive job growth, the state of Tennessee offers other favorable conditions for entrepreneurs. No personal income tax and more training and education opportunities for the workforce are just some of the factors that make The Volunteer State a great place for business owners of both established companies and startups. While the entire state offers favorable conditions for businesses, the eastern and middle areas are considered the best to start a business; this includes big cities like Nashville and Knoxville; however, cities throughout the state are also offering great opportunities for business operations, such as Chattanooga, Memphis, Pigeon Forge, Alcoa, Lebanon, and Crossville.
Industries that are thriving in Tennessee include:
- Information technology
- Technology, as a whole
Business Insurance Regulations & Limits In TN
The Tennessee Department of Commerce & Insurance regulates insurance in Tennessee. Just like any other state in the country, there are regulations in place regarding commercial insurance. Business owners are required to carry certain types of coverage to protect themselves, their clients, and their employees.
Small businesses with 5 or more employees are required by TN state law to have workers comp insurance coverage. That drops to 1 or more employees if they operate in the construction business or trades (construction service providers).
If you use certain types of motor vehicles for business-related purposes, you'll also need to invest in commercial auto insurance coverage to protect your drivers, as well as other drivers on the road.
Additional Resources For Auto Service & Repair Insurance
Read useful small business auto service and repair insurance policy information. In an aotu related business, you need to have the right type of commercial insurance coverage so that your garage, employees, and customers vehices & other property is protected.
- Auto Dealers
- Auto Detailing & Mobile Car Wash
- Auto Dismantlers
- Auto Garage
- Auto Glass Repair Shops
- Auto Paint Shops
- Auto Service Repair
- Auto Supply Parts Store
- Car Rental
- Car Wash
- Gas Station
- Motorcycle Dealers
- Parking Lot
- RV Dealers
- Snowmobile Dealers
- Truck Rental
- Used Car Dealer
There is a Auto Service Risks Program is an enhancement of the Commercial Package Policy that is available to certain Auto Service Operations.
Automobile repair shops and garages offer a wide variety of mechanical services, from engine repair to tune-ups. The operation may be stand-alone or be part of another business such as an automobile dealership or filling station.
Gasoline stations are normally limited to the dispensing of gasoline, kerosene, diesel or fuel oil with incidental sales of auto accessories and pre-packaged snack food items. Larger gasoline stations may offer other services, such as auto repair, retail sales of food or auto parts, snack bar or restaurant, propane tank exchange, towing, or baths and overnight lodging facilities for truckers.
Car washes provide facilities for cleaning automobiles and other motor vehicles. Some are drive-through with either partially or fully automated conveyance of the vehicle throughout the operation. Hand washing, waxing, or interior cleaning of the vehicle may be offered, with customers sent to a waiting area. Damage to the customers' vehicles is the primary exposure as machinery and washes can break antennas, pull off stripping, crack glass and damage tires.
The three basic types of risks that are contemplated by the Auto Service Risks Program include:
- Repair Shops - operations primarily engaged in auto repair. This includes shops that do body, fender, radiator, ignition service and paint work.
- Service Stations- operations primarily engaged in servicing autos. The sale and installation of auto accessories are a part of this category as long as major engine or bodywork is not performed. Car wash facilities are eligible.
- Storage garages and other parking places.
The following classifications are specifically listed as eligible: Automobile:
- Quick Lubrication Services
- Repair or Service Shops
- Repair Shops–Self Service
- Car Washes–self-service and full-service
- Convenience Food/Gasoline Stores–self-service, full-service and combined
- Gasoline Stations–self-service, full-service and combined
- Parking–public-open air and not open air
Automobile, motor home, mobile home, trailer, and motorcycle dealers are NOT eligible for this program.
Minimum recommended small business insurance coverage: Building, Business Personal Property, Business Income, Equipment Breakdown, Employee Dishonesty, Money and Securities, Accounts Receivable, Computers, Signs, Valuable Papers and Records, General Liability, Employee Benefits, Environmental Impairment, Underground Storage Tank Liability, Umbrella, Hired and Non-owned Auto & Workers Compensation.
Other commercial insurance policies to consider: Earthquake, Flood, Computer Fraud, Forgery, Goods in Transit, Cyber Liability, Employment-related Practices, Business Automobile Liability and Physical Damage, Garagekeepers and Stop Gap Liability.
Request a free Tennessee Used Car Dealer insurance quote in Alcoa, Arlington, Athens, Atoka, Bartlett, Bloomingdale, Brentwood, Bristol, Brownsville, Chattanooga, Church Hill, Clarksville, Cleveland, Clinton, Collegedale, Collierville, Columbia, Cookeville, Covington, Crossville, Dayton, Dickson, Dyersburg, East Ridge, Elizabethton, Erwin, Fairfield Glade, Fairview, Farragut, Fayetteville, Franklin, Gallatin, Germantown, Goodlettsville, Green Hill, Greenbrier, Greeneville, Harriman, Harrison, Hartsville, Henderson, Hendersonville, Humboldt, Jackson, Jefferson City, Johnson City, Kingsport, Kingston, Knoxville, La Follette, La Vergne, Lakeland, Lawrenceburg, Lebanon, Lenoir City, Lewisburg, Lexington, Loudon, Lynchburg, Manchester, Martin, Maryville, McKenzie, McMinnville, Memphis, Middle Valley, Milan, Millersville, Millington, Morristown, Mount Juliet, Munford, Murfreesboro, Nashville, Newport, Nolensville, Oak Ridge, Oakland, Paris, Pigeon Forge, Portland, Pulaski, Red Bank, Ripley, Savannah, Sevierville, Seymour, Shelbyville, Signal Mountain, Smyrna, Soddy-Daisy, South Cleveland, Spring Hill, Springfield, Sweetwater, Tellico Village, Tullahoma, Union City, White House, Winchester and all other TN cities & Tennessee counties near me in The Volunteer State.
Also find Tennessee TN local small businesses by General Liability Class Code and learn about Tennessee small business insurance requirements for general liability, business property, commercial auto & workers compensation including TN business insurance costs. Call us (901) 255-6544.