Dealerships, new and used, are open to different levels of risk and it’s important to understand what kinds of coverages are available and why they are needed. And since every dealership has a lot full of cars, understanding the importance of Dealer Open Lot Insurance Coverage is a must.
What is Dealers’ Open Lot Coverage?
This protection covers any physical damage to your inventory…all the vehicles on your property. Most dealerships store their cars/trucks outside and with that comes a higher risk of those cars being damaged or destroyed due to fire, hail, lightning, and vandalism. No one likes to think this would happen but it’s better to be prepared in case it does.
If a once-in-a-decade hail storm rolls through your town, every car could sustain damage and this coverage would make sure all units are fixed properly.
What are the Different Types of Dealers Open Lot Insurance Coverage?
It will protect both new and used, service loaners, and demo units (if your store offers them). If your dealership sells RVs, motorcycles, heavy trucks, etc, they are covered as well.
Two Main Types of Coverage:
- Collision: Protects against collision with another vehicle or if the vehicle has hit a stationary object or turned over.
- Comprehensive: Covers everything collision doesn’t. Reimburses for any losses related to weather, fire, theft, etc.
Another coverage endorsement that may be available is False Pretenses Coverage (think taking a stolen car in trade without knowing or a vehicle is stolen during a test drive).
Are Their Limits to Dealers Open Lot Insurance Coverage?
Yes…there are limits of insurance which is the maximum amount an insurer will pay and for Dealers Open Lot Insurance, there is typically an overall limit and a per-vehicle limit. Always be sure to choose a coverage limit that matches the value of the cars you have on the lot. You don’t want to be caught short with coverage for $25k average vehicle limits for $50k value inventory.
Consider adding separate limits of coverage for inventory that may be stored elsewhere and for losses in transit from one lot to another.
What is the coinsurance clause in Dealers Open Lot Insurance Coverage?
It’s essentially a requirement to insure 100% of the value of your inventory. If you don’t carry 100% coverage, your insurer can reduce the amount paid out for a claim by the same percentage you do carry.
Always keep your inventory values up-to-date as it’s easy to miss this when both new and used can vary a lot depending on what you’re buying at auction and the trades you are taking in that are not wholesaled.
Monthly reporting keeps this value accurate and is more favorable than non-reporting where it’s a blanket value assigned when you first get the policy.
Are there any exclusions?
Common exclusions include:
- Radar equipment
- Audio equipment not properly installed
- Damage resulting from military actions
- Racing, demolition, or stunt damage
- Wear and tear, mechanical breakdown or damage to tires.
Is there a Dealers Open Lot Insurance deductible?
Expect a deductible which is the portion of the loss you must pay out of pocket before the insurer begins coverage. Most policies have a maximum deductible in case of a large loss of several vehicles.
For example - if a fire damaged 25 cars on your lot and your per-vehicle deductible was $800 per car but your maximum deductible was $8000, you would only have to pay that versus paying $20k out of pocket.
Be sure to check with your insurer to see how you can save money on the policy through different levels of deductible (as you would with your personal auto policy).
It’s critical to be sure that your second biggest asset (after your buildings), your inventory, is covered for the maximum value in case of either a small loss from vandalism to a massive flood event.
If you are looking to change insurers and want more info about Dealers Open Lot Insurance coverage, reach out to us here for a quote today. There is a better way to protect your dealership that can save your dealership thousands.