Car Dealer Insurance: How Does It Work and What Does It Cover?

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If you own a used car dealer, you may have been required by the state you do business in to carry adequate auto dealers garage liability insurance.  Garage liability insurance coverage isn’t a traditional coverage found on most commercial insurance policies, therefore it may sound complicated or confusing.

Garage liability is defined as insurance that covers the legal liability of auto dealers, truck dealers, or motorcycle and recreational vehicle for claims that arise out of normal business operations in the event of bodily injury and property damage.

How Does Car Dealer Insurance Work?

Car Dealers are generally required to carry a minimum garage liability insurance policy to satisfy the requirements of the state.  For example, in Illinois and Indiana, minimum limits for auto dealers garage liability insurance are:

  • $100,000 bodily injury (BI) per person
  • $300,000 bodily injury (BI) per accident
  • $50,000 property damage (PD)

State of Illinois (cyberdriveillinois.com)

State of Indiana (in.gov)

What do these numbers mean?  In the event of an auto accident, in which the driver of the dealer’s covered vehicle is deemed to be liable, or at fault, the insurance carrier will provide third-party bodily injury coverage in the maximum amount of $100,000 per person, but no more than the $300,000 limit to all people in injured in the vehicle.  The maximum amount this type of policy will pay towards third-party property damage, including other vehicles, buildings, signs and fences, etc., is $50,000.

Auto Dealers Open Lot Insurance

There are other optional coverages that may be added to an auto dealers insurance policy.  One popular coverage is physical damage insurance, or open lot coverage.

Auto Dealers Open Lot coverage provides protection to the car dealership’s own vehicles.  Generally referred to as physical damage, this coverage is similar to a full coverage personal auto insurance policy.

In the event of an auto loss or accident, regardless of fault, the insurance carrier provides coverage to the dealer’s owned vehicle being driven.  Limits of coverage vary based on your specific application, but often include a per vehicle limit, as well as a total lot limit.

Garagekeepers Legal Liability Insurance

Garagekeepers legal liability insurance is another desired coverage car dealership owners usually opt for.  To put it simply, if your auto dealership offers repair services or operates a tow truck, GKLL is imperative.  Garagekeepers legal liability (GKLL) protects your customers’ cars or trucks while being serviced, parked or stored at your business.

What Does Car Dealer Insurance Cover?

Think of car dealer insurance as a package policy, which most likely includes garage liability insurance, but can also include dealers open lot coverage or garage keepers legal liability among others.  It is important to review your auto dealer policy to ensure the coverage you need is included in your policy.

Insured ASAP is a leading provider of car dealer insurance in Chicago and throughout Illinois and Indiana.  Contact us today for more information, or to request a quick and competitive car dealer insurance quote.

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