441110 New Car Dealers

441120 Used Car Dealers

Description of Operations:

Automobile dealers can provide a wide variety of services in addition to the sales of new and/or used vehicles. These services can be the sales of auto parts and accessories, auto repair facilities and body shops, rental and leasing operations, auto club and towing services, car wash operations, or the sales and service of recreational vehicles.

  • Property exposure comes from the garage operations. These are normally conducted in an area separated from the main showroom, which can control the damage for a loss. The flammable liquids in the repair area feed the fire. All spray painting operations should be kept separated from other operations for both fire protection but also overspray property damage. Housekeeping is a must for controlling fire. Greasy, oily rags must be kept in covered metal container, work areas must be cleaned regularly and trash removed from the building.

  • Inland marine exposure is from the floor plan. The arrangements with the car manufacturers vary. The floor plan coverage provides the coverage for the vehicles for sale. Particular concern must be for the hail and wind damage on the outside cars. There is also potential for vandalism and theft. Lots should be well lighted with all lots chained or fenced to prevent transport. The more expensive models should be moved inside. Security guards may be appropriate in some areas.

  • Crime exposure comes from many areas. Employee dishonesty is possible in many areas, including bookkeeping, automobile theft and service inventory theft. Thorough background checks and checks and balances must be in place. All keys must be monitored. In addition, cash transactions are not uncommon, so money and securities must be monitored and holdup precautions taken, along with counterfeit checking procedures.

  • Garage coverage provides both the premises and the auto coverage. The premises exposure centers on the potential customers who are looking over the cars and also the customers who have returned for service work. Parking lots, showrooms and sidewalks must be well maintained. There must be customer waiting areas for the service area. Automobile liability includes the customers who test-drive the vehicles and also the demonstrator vehicles that are available to salespersons and managers. There must be set procedures, such as salespersons accompanying the customers and guidelines for usage of the demonstrators. Repair operations are the major products/completed operations exposures. There should be a check-off procedure in place prior to release of the vehicle to the customer to prevent the return of the vehicle with any vital functions not working properly.

  • Garagekeepers exposure is important since the applicant is responsible for the customer’s car. There must be a procedure for the keys to prevent the wrong person from taking the vehicle. Lots must be well protected and away from the vehicles for sale. They should be well lighted.

  • Workplace safety exposure is primarily from the garage operation. All employees should have ear and eye protection. Hoists need to be regularly inspected to prevent falls. The proper use of lifting techniques and of dollies should be encouraged.

Minimum recommended insurance coverage automobile dealer:

Building, Business Personal Property, Business Income, Accounts Receivable, Computers, Floor Plan, Goods in Transit, Signs, Valuable Papers, Dishonesty, Disappearance and Destruction, Money and Securities, Computer Fraud, Money Order and Counterfeit, Environmental Impairment, Umbrella, Garage, Garagekeepers, Non-Ownership Automobile

Other Insurance coverage to consider for automobile dealer:

Employment Practices Liability