Industry overview
Automotive and vehicle-sales businesses combine a sales operation with a lot full of valuable, drivable inventory. They face the unusual exposure of customers and staff operating vehicles, plus the constant movement of cars on and off the premises.
Many also service or store customer vehicles, adding garagekeepers exposure to their sales risk. Insurance for the sector commonly centers on specialized garage coverage that addresses both operations liability and the vehicles in the dealer's care.
Common business types
- New and used auto dealerships
- Motorcycle and powersports dealers
- RV and trailer dealers
- Commercial and fleet vehicle sales
- Boat and marine dealers
- Used-vehicle and specialty lots
Common risks
Inventory exposure
Lots full of vehicles are exposed to weather, theft, and damage.
Test-drive accidents
Customers and staff driving vehicles create accident and liability exposure.
Customer vehicles in care
Servicing or storing customer vehicles creates garagekeepers exposure.
Premises injuries
Customers on the lot and in showrooms create slip-and-fall exposure.
Employee dishonesty
Handling deposits, payments, and titles creates crime exposure.
Data and finance handling
Processing customer financial information creates breach exposure.
Common insurance requirements
Dealers commonly need garage liability and garagekeepers coverage, and lenders financing inventory typically require physical-damage protection on the lot. Many jurisdictions require dealer bonds, and dealerships with employees must carry workers compensation. Finance operations may face data-security expectations.
Recommended coverages
Operational Coverage
- Garage Liability Insurance Tailored to dealerships, addressing operations liability and customer vehicles in care.
- Commercial Property Insurance Protects showrooms, service areas, and lot inventory against covered perils.
- Business Auto Insurance Covers dealer vehicles and the auto exposures of moving inventory.
Employee-Related Coverage
Contractual Coverage
How much does it cost?
There is no single price for automotive & vehicle sales insurance — the total depends on which of these coverages you carry and the specifics of your business. As a rough guide, here are general national averages for the coverages this industry commonly needs.
- Varies by location, vehicles, and operations — a quote is required
- $1,000–$3,000 per year, depending heavily on property value and location
- $1,500–$3,000 per vehicle per year
- 1%–3% of the bond amount per year for many qualified businesses
- $500–$3,000 per year, driven largely by payroll and job class codes
These are general national averages shown for comparison only — not a quote. Actual premiums vary widely with underwriting and depend on the factors above and the specifics of your business, including size, revenue, location, claims history, and the limits you choose. See how we estimate costs.
Hypothetical claim examples
Test-drive accident
An accident occurs during a customer test drive. Garage liability may help respond to the resulting claim, subject to policy terms.
Customer vehicle damaged
A customer's vehicle is damaged in the service area. Garagekeepers coverage may help with the covered loss, subject to terms.
Lot damage from storm
A storm damages vehicles on the lot. Physical-damage coverage may help, subject to terms and deductibles.
Frequently asked questions
What is garagekeepers coverage?
Garagekeepers coverage helps protect customers' vehicles in your care, custody, or control, such as during service or storage at the dealership.
Why do dealers need garage liability?
Garage liability is tailored to the unique exposures of automotive businesses, including operations involving vehicle use that standard policies may not fully address.
Are dealer bonds required?
Many jurisdictions require licensed dealers to maintain a dealer bond as a condition of operating, which is a form of surety bond.
Is lot inventory covered against weather?
Inventory physical-damage coverage can help with weather and other covered perils on the lot, often required by lenders financing inventory.
Do dealerships face data exposure?
Yes. Processing customer financial information for sales and financing creates breach exposure that cyber coverage can address.
How do I get a quote for my business?
Call The Southern Agency at 1-800-777-1872 or request a quote online, and an advisor can help with coverage tailored to your specific business type.
All Automotive & Vehicle Sales business types
Get covered for any of the 10 business types in this industry.