New dealership owners have a mountain of priorities to tackle when opening their business and being ready for any financial and/or legal challenges that could come their way. Proper commercial insurance is one of the most important things to address.
One of the most common for dealerships (and most businesses with more than one employee) is Workers Compensation Insurance. Often, however, this is confused with General Liability insurance which is understandable as there may seem on the surface to be some overlap but at their core, they protect two different parties at the dealership.
To safeguard their operations, it’s critical for dealers to have the most comprehensive insurance coverage possible which includes Workers Compensation Insurance, too.
It’s important to understand how it’s designed to help protect your dealership and how it differs from General Liability Insurance as BOTH are equally important.
What is Workers Compensation Insurance?
This is a specific type of insurance coverage that protects your dealership employees in the event of work-related injuries or illnesses. Automotive dealerships employ a diverse range of staff, from sales reps and service technicians to administrative personnel in the back office.
As such, Workers Compensation Insurance is important to mitigate the risks associated with potential workplace accidents or other occupational hazards.
Here are the 3 main features of Workers Compensation coverage:
- Coverage for medical expenses - This insurance provides compensation for any medical treatments, hospital bills, and rehab costs incurred by an employee due to any workplace injury or illness. And with medical and prescription costs on the rise, this will be an important lifeline for your employee to prevent them from being financially burdened while recovering.
- Wage replacement - Workers Compensation Insurance also ensures that the employee receives a portion of their lost wages during their recovery. This financial support helps them maintain their livelihoods while they are unable to work and can be used to help pay their living expenses, etc.
- Legal protection - By providing coverage against lawsuits, Workers Compensation Insurance shields the dealership from potential legal liabilities arising from employee injuries. It typically includes employer’s liability coverage helping to protect the dealer from being sued by the employee.
What is General Liability Insurance?
This coverage is a much broader protection for the dealership for liabilities that can occur during business operations. It extends protection beyond the scope of Workers Compensation Insurance by covering third party claims such as bodily injury, property damage, and personal injury.
Key features include:
- Bodily Injury Coverage - In the automotive industry, accidents can occur on the dealership lot, resulting in bodily harm to either customer or visitors (vendors, repair personnel, etc). General Liability Insurance will cover medical expenses, legal costs, and compensation for injuries sustained by third parties while on your property.
- Property Damage - Dealerships have valuable inventory including car inventory, parts, service, and office equipment. In the event of theft, fire, vandalism, or natural disasters (floods, earthquakes, etc), this insurance will compensate for repair or replacement costs.
- Personal Injury - This aspect of General Liability Insurance protects the dealership against claims related to libel, slander, defamation, and false advertising. In an era where online reviews can make or break your business, and social media is playing such a huge role in impacting business reputations, this coverage is particularly important for dealerships.
What are the main differences?
One is insurance protecting employees (workers compensation) and one is insurance protecting a business from third-party claims against it (business liability).
Both can cover injuries, but for different people: Workers Compensation Insurance covers employee injuries. General Liability Insurance covers injuries your business causes to a non-employee such as a client.
Workers compensation insurance is required in many states. General liability insurance is not required by state law but it may be required by licensing boards, business clients, or financial lenders.
DealerSure is here to help you navigate these coverages and help you choose the level of policy that’s best for your store. Come take a look at www.dealer-sure.com and let us either help you get started if you are opening up a new dealership or we can compare your current policy with ours. We’re willing to bet we can beat it!