Driving Success: Navigating Used Car Dealership Insurance in Ohio

For used car dealers in Ohio, the road to success is paved with more than just quality vehicles.  If you’ve been in business for at least 3 years, have had a good claims history, don’t allow buy here-pay here, and are a best-in-class operation, we will likely have a competitive insurance option for you.

Used car dealer insurance isn’t just a formality; it’s a crucial safeguard that ensures your business can weather unexpected storms. Let’s dig into the details of this vital coverage, exploring recommended coverages, and addressing the needs of used car dealerships.

Understanding the Unique Risks of Used Car Dealerships

Used car dealerships face a distinct set of risks compared to other businesses. The very nature of selling pre-owned vehicles introduces variables that require specialized insurance solutions. These risks include:

• Vehicle Condition: Used cars, by definition, have a history. This can lead to unexpected mechanical issues, potentially resulting in customer disputes or legal claims.
• Test Drive Liability: Allowing potential buyers to test drive vehicles exposes the dealership to liability for accidents or damage that may occur during the test drive.
• Dealer Open Lot Physical Damage: Weather events, vandalism, or theft can damage or destroy vehicles parked on the dealership lot.
• Title and Document Errors: Mistakes in title transfers or other paperwork can lead to legal complications and financial losses.
• Customer Disputes: Dissatisfied customers may file lawsuits alleging misrepresentation, fraud, or breach of warranty.
• Customer Vehicles onsite: Customer vehicles in your care, custody, or control could be damaged by vandalism, storms, or other weather-related events.

Recommended Coverages for Used Car Dealerships

To mitigate these risks, used car dealerships should consider the following essential coverages:

• Garage Liability Insurance: This is the cornerstone of used car dealer insurance. It provides coverage for bodily injury and property damage that occurs because of your business operations, including test drive accidents and customer injuries on your premises.
• Garage Keepers Liability Insurance: This protects customer vehicles in your care, custody, or control. It covers damage caused by fire, theft, vandalism, or other perils while the vehicles are on your lot or are being serviced.
• Dealer’s Open Lot Insurance: This coverage protects the vehicles on your lot from damage caused by weather events, theft, or vandalism. It’s crucial for protecting your inventory from losses.
• False Pretense Coverage: This protects against losses resulting from fraudulent transactions, such as accepting a stolen vehicle or a counterfeit payment.
• Title Errors and Omissions Insurance: This coverage protects against financial losses resulting from errors in title transfers or other paperwork.
• Business Property Insurance: This covers your dealership’s building, equipment, and inventory from damage caused by fire, wind, hail, or other covered perils.
• Mechanics Professional Liability: Coverage for errors a mechanic unintentionally makes. Let’s look at an example! A mechanic is working on a car and fails to properly tighten a vehicle’s lug nut, which causes an accident after the vehicle is picked up by the customer. The subsequent damage to the vehicle and any other party would be covered.
• Commercial Auto Liability: Coverage that protects vehicles owned by dealerships and used in day-to-day operations.  Some dealers own commercial vehicles for snow plowing and maintenance, running to get parts, or furnishing autos to family members.  Not all floor plan policies will cover this exposure!
• Business Interruption Insurance: This helps replace lost income and cover ongoing expenses if your dealership is forced to close due to a covered event.
• Cyber Liability Insurance: In today’s digital age, used car dealerships often store customer data electronically. This coverage protects against losses resulting from data breaches or cyberattacks.

Used Car Dealerships: Navigating Complexities

Used dealerships face a unique set of challenges. They must manage the risks associated with their inventory and customer expectations.

For used car dealerships, a comprehensive insurance strategy should include:

• Robust garage liability coverage that addresses the potential for mechanical issues in used vehicles.
• Comprehensive dealers open lot coverage that accounts for the varying values of new and used vehicles.
• Thorough title errors and omissions coverage to minimize the risk of paperwork errors.
• A strong focus on customer service and dispute resolution to manage customer expectations.

Partnering with Hitchings Insurance

A comprehensive used dealer insurance package is crucial to operating your business. At Hitchings Insurance, we understand the unique needs of used car dealerships in Ohio.

Contact Hitchings Insurance today for a free consultation and let us help you drive your dealership toward success. Not all dealerships are created equally, nor can we help every one of them with an insurance option, but if you meet the basic qualifications laid out at the beginning of the blog, we can likely help!