Auto dealerships need to have certain types of insurance in place. Two of them include garage liability and dealer open lot insurance, both of which commonly are mistaken for each other. As it turns out, both do very different things, with garage liability covering any injuries or property damage that happens to others while on your dealership’s property, and dealer open lot insurance covering the physical damage that occurs to vehicles that you hold for sale.
Since most issues on car lots involve customer vehicles, employee vehicle use, and test drives, it’s crucial to have both these insurance policies in place.
Why Dealers Mix Up These Types of Insurance
Let’s start by going over both garage liability and dealer open lot insurance in a bit more detail.
Garage Liability
Garage liability insurance covers everything from customer injuries on the premises, such as slip and fall accidents or worse, to liability issues that arise from your employees’ actions. Any damage that your vehicles cause on other people’s property, like an accident during a test drive, is covered by this policy as well.
While garage liability policies have plenty of options, there are some things that they don’t cover, like your building and its contents, as well as any injuries that happen to your employees while they’re at work. It also doesn’t cover damages to the vehicles in your inventory or to the customer vehicles in your care. (You’ll need garage keepers’ insurance for that.)
Dealer Open Lot Insurance
Dealer open lot insurance is designed to protect your inventory, since all of those vehicles on your lot listed for sale make up your business’ livelihood. This type of insurance provides coverage for those vehicles, often paying for things like repairs from vandalism, hail, and fire damage, as well as issues including theft and collisions (as long as that part of the policy has been purchased). Please note that dealer open lot insurance is subject to policy limits, like deductibles, and there are scheduled inventory limits.
As with garage liability insurance, dealer open lot policies have some limitations. They don’t cover things like mechanical breakdowns from standard wear and tear or vehicles owned by customers. Other limits include accident liability and employees using your vehicles during their off-hours. You’ll need specialty policies for that.
Despite the differences in coverage, it’s easy to see why dealerships tend to overlook these policies or get them confused: there are too many other types of insurance in the mix. In order to make sure that you have all of the policies that you need, reach out to your Charlotte Insurance agent.
Have Questions? Contact Charlotte Insurance
Want to learn more about the many policies that auto dealerships need in order to be well insured when the unexpected strikes? Contact Charlotte Insurance. Our agents can explore and explain all available options and put together the insurance coverage plan your dealership needs.