Dealership owners have a lot to worry about. Things like: “Will my building catch on fire due to a spark from the shop area?” “And what happens if that hurricane damages my inventory?” Thankfully, there’s insurance for both of those scenarios, as well as ones that play out when issues happen on test drives or with loan vehicles.
In general, insurance coverage issues pop up when customers are driving vehicles that are owned by the dealership, due to them not being named as drivers on the policy. Other problems, like the extended use of a loaner vehicle, arise when insurance claims need to be called in. What it comes down to is the type of insurance policy needed, like a garage liability or commercial auto ones, as well as the procedures that need to be followed when cars in your inventory are driven off the lot.
Luckily, there are a number of proactive solutions to fall back on when it matters most.
Standard Coverage Surprises
Auto dealerships need to have a number of insurance policies in place, but just because they pay those premiums, this doesn’t mean that there aren’t coverage gaps. For example, if a dealer plate goes missing and is misused, it could lead to criminal charges that your business may be liable for, based on the license plate alone. Other problems, like loan vehicles being used for extended periods of time or during off-hours by employees or crashes that happen during a test drive, can also expose gaps in your insurance.
Who Is Insured?
Generally, insurance policies need to have all of the potential drivers listed. This isn’t always possible with dealerships because adding test drivers to a plan and then removing them will take too much time and throw off potential buyers due to time restrictions. Thankfully, some dealership policies take this into account, and allow for drivers who aren’t specifically listed, as long as you have their information.
As far as who is typically insured on dealership insurance plans, this would include customers who have authorization, your dealership’s employees, and in some cases their family members, and anyone else who plays a crucial role in your company’s operations
Reducing Claims Issues with Test Drivers and Loaners
Yes, test drivers are often covered by certain dealership plans. However, in order to avoid problems with potential insurance claims, you need to do the following:
- Keep a copy of each test driver’s license, and verify that the license is valid.
- Stick to minimum test drive age regulations.
- Document the vehicle’s condition before and after the test drive.
- Have the driver sign an agreement.
Similar requirements can help you avoid insurance claim issues with loaner vehicles as well. Make sure that those requirements, including approved drivers and mileage limits, are clearly listed on the paperwork.
Have Questions? Contact Charlotte Insurance
Want to learn more about how you can protect your dealership from test driver and loaner car insurance gaps? Contact Charlotte Insurance. Our agents can explore and explain all available options and put together the insurance coverage plan your dealership needs.