With up to $100 million in brand new vehicles out on the lot, car dealerships face considerable exposure. Enter: niche insurance for auto dealerships.
Insurance Business spoke to Jeff Willoughby, director of dealer operations special accounts at Sentry, about the risks and coverages auto dealers expect from their insurers.
“Their biggest concern is probably their garage liability policy, which protects them in the case of their vehicles being involved in auto accidents – whether it be their employees driving the vehicle, or customers coming in and test-driving cars,” he said. “That’s a huge liability issue the dealers face.
“Another one of the things foremost on their minds is protection for their inventory. Many of these dealers have millions of dollars of risk, sitting out on their lots – upwards of $30, $40, $100 million of vehicles sitting around that can be damaged, whether that be weather related or some other type of event.
“And they’re concerned about their facilities. Many of these auto dealers have very large, nice facilities that they want to make sure they protect, in case of fire or windstorm or another type of event that could bring their facility down.”
In addition to these exposures, though, the program covers plenty more, he said.
“It’s a very niche-oriented insurance program,” Willoughby explained. “Dealerships are commonly looking for a specific garage liability program that will offer them the full array of coverages they will need, including … physical damage coverage for their inventory; garage insurance for their liability; property coverage to insure all of their facilities and contents; employment practices liability, which protects them for their employment-related issues and liability – discrimination, harassment, wrongful termination, things of that nature; crime coverage; and cyber coverage to name a few. It’s a full package program.”
Due to the evolving nature of in-car technology, and with automation around the corner, insurance has had to change with the times, Willoughby said.
“The actual policies themselves haven’t changed a great deal, but the underwriting of the risk [has],” he noted. “Distracted driving is a huge issue in the insurance marketplace, and that leads right into the auto liability section. Some of the largest claims we see are with distracted driving, so we have to look at policies and procedures that dealers have in place to prohibit distracted driving and to monitor that. That’s a big issue for us, as the insurance company.”
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