To new dealership owners that are about to embark on the exciting (or…not so exciting) world of commercial dealership insurance research, listen up. There are several factors that will help determine the cost of coverage…everything from the types of cars you sell, your location, and even how many prior claims you have made (if you are looking to replace existing coverage).
There is a common misconception that all coverage for dealerships are roughly the same cost and that’s a costly assumption if this is your first time building out the insurance you need.
You may be in for a bit of shock unless you are aware of the 7 common factors that will directly impact how much you pay for commercial dealership insurance.
Let’s take a look -
- Employee driving history - Your lot porters, salespeople, service techs and anyone else that would be driving a customer’s car or car in inventory must have safe driving records with no major issues. Why would an insurer offer low rates for two porters with recent DUI’s or major moving violations? They are a risk and you may pay more.
- Inventory Value - If your lot has mostly $15k and under older cars, rates will be cheaper than they would if all of your inventory was highline or luxury units. The pricier the vehicles you sell, the higher your insurance may be as it makes sense that the replacement value will be significantly different in case of a loss.
- Loss history - If you are changing insurance providers, your prior losses can impact your new rates. Think of your homeowners policy…if you had recent back-back claims for a fallen tree and a roof leak, your rates will be higher in the following year. Same goes here.
- Dealership location - While there is no exact science to this factor, generally rates will be higher in urban centers with higher concentration of population or higher known crime rates. A dealership located in a coastal area known for flooding may carry higher rates due to potential for flood losses.
- Safety controls - What kind of security and safety is in place can also impact policy rates. If your dealership has cameras, electronic key storage, or other security technology in place, that can help reduce your insurance rates. Even security protocols inside offices that keep customers sensitive personal information safe can help keep costs lower.
- Employee headcount - This one is simple…the more employees you have, the greater risk of issues with theft, workers compensation, potential accidents when driving customer vehicles, etc.
- Demos/Loaner vehicles - If your dealership will have loaner vehicles available for service customers or if you allow employees to drive cars in inventory as a demos, your insurance rates could be higher.
It may seem like a list that skews a bit negative but there are some things you can do to reduce your rate and risk. It’s not all bad news.
Whether you’re opening your first dealership and exploring the commercial insurance options for your dealership or you are looking to change insurance providers in hopes of getting a better rate than you are paying now, we are here to help you navigate the process.
Drop us a line at www.dealer-sure.com through our Contact Us email and we’ll be happy to show you how to get the best rates to protect your dealership.
And if you already have coverage somewhere else, we’ll show you how we stack up with your current provider to show you where you can start saving immediately.