Running a car dealership involves unique risks, especially when vehicles are constantly moving, test-driven, or showcased. To manage these risks effectively, dealer plate insurance coverage is crucial in protecting auto dealers from potential financial losses.
In this post, we will explore dealer plate insurance, how it works, and why it’s essential for car dealers, whether they operate large auto dealerships or smaller used car dealerships.
What Is Dealer Plate Insurance Coverage?
Dealer plate insurance coverage is a specialized form of auto dealer insurance that covers vehicles bearing dealer plates. Auto dealerships commonly use these plates for vehicles in transit, being tested, or temporarily off the lot for sale purposes. Whether the car is being driven by an employee, a customer on a test drive, or used for dealership operations, the vehicle is protected under dealer plate insurance.
This type of coverage forms part of a broader auto dealership insurance plan and is essential for ensuring that the vehicles on your lot and those being moved are adequately covered.
Why Auto Dealers Need Dealer Plate Insurance Coverage
Running an auto dealership comes with numerous risks, particularly related to vehicle movement. From property damage to accidents that could result in bodily injury, auto dealers face various challenges that can lead to legal liabilities. Dealer plate insurance ensures that vehicles operated with dealer plates are protected from such risks.
Protecting Against Physical Damage
When vehicles are out on a test drive, there’s always the possibility of an accident. Dealer plate insurance provides physical damage coverage to cover any damage sustained during the drive. This includes protection for collision coverage and comprehensive coverage, which covers non-collision-related incidents such as theft, vandalism, or natural disasters.
Liability for Bodily Injury and Property Damage
In the event of an accident, dealer plate insurance coverage also protects against liability insurance claims, including bodily injury and property damage. Whether a customer or employee is at fault, this coverage ensures that the dealership isn’t financially responsible for damages or injuries caused during vehicle operation with a dealer plate.
Legal Costs and Hidden Fees
Operating a dealership involves potential legal liability related to accidents and claims. Auto dealerships may face hefty legal costs and hidden fees after an accident without proper dealer plate insurance. Coverage for legal fees ensures your business isn’t overpaying out of pocket for costly legal battles.
Dealer Plate Insurance Coverage and Other Auto Dealer Insurance
Dealer plate insurance is only part of a comprehensive auto dealer insurance program. Most auto dealerships opt for a garage liability insurance policy, which provides more broad-ranging protection for their operations. Below, we’ll outline how these policies work together to provide robust dealership protection.
Garage Liability Insurance for Car Dealers
Most auto dealers carry garage liability insurance as a core component of their business coverage. Garage liability insurance protects bodily injury and property damage that occur due to dealership operations, covering risks that might not fall under standard car insurance policies.
While dealer plate insurance covers vehicles with dealer plates, garage liability insurance covers other aspects of the dealership’s operations, ensuring that any liabilities associated with your business, such as car accidents, are covered.
Open Lot Coverage for Auto Dealerships
For dealerships, especially those operating in areas like New York or New Jersey, ensuring that vehicles on display are adequately covered is vital. Open lot coverage is another form of commercial auto insurance that protects vehicles parked on the dealership’s lot from theft, vandalism, and other risks. This is an essential complement to dealer plate insurance, as it covers cars that are not being driven but are still at risk.
Employment Practices Liability for Auto Dealers
Another significant area of risk for car dealerships involves their employees. Employment practices liability coverage protects against employee claims for wrongful termination, harassment, discrimination, and other employment-related issues. While it’s not directly related to dealer plate insurance, it’s a crucial part of an auto dealership’s overall insurance portfolio.
Factors That Influence Dealer Plate Insurance Costs
Several factors come into play when determining the cost of dealer plate insurance. Insurers will assess your dealership’s size, the number of vehicles insured, and the risk associated with your operations. Some of the key factors include:
- Location: Dealerships in areas with higher crime rates or more significant accident risks, such as major cities in New York or New Jersey, may face higher premiums.
- Types of Vehicles: Whether your dealership specializes in luxury cars, used vehicles, or both, the type of vehicles on your lot will affect your insurance costs. High-value vehicles will typically result in higher premiums.
- Number of Dealer Plates: The more dealer plates you use, the greater the coverage you’ll need, directly impacting the cost of your dealer plate insurance.
Finding the Right Insurance Provider for Dealer Plate Insurance
To get the best coverage for your dealership, it’s essential to work with insurance providers that understand the unique risks faced by auto dealers. Providers like Program OFNSM Insurance and Insured ASAP specialize in offering tailored auto dealer insurance packages, including dealer plate insurance.
Working with an independent agent can also help you explore multiple options and find the best rate for your dealership. Independent agents can guide you through the available insurance products, ensuring you have the coverage to protect your business from financial risks.
Conclusion
Dealer plate insurance coverage is essential to any auto dealership’s insurance program. Whether you’re a small used car dealer or a large auto dealership, this coverage protects you from the unique risks associated with vehicles bearing dealer plates. From physical damage coverage to liability insurance for accidents and injuries, ensuring that your dealership is adequately protected is crucial.
Partnering with the right insurance provider and combining dealer plate insurance with other key coverages, such as garage liability insurance and open lot coverage, will help safeguard your business from potential financial losses, allowing you to focus on running a successful dealership.
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