Businesses in the auto industry face a unique set of risk exposures. The right insurance coverages can make all the difference. Here are six auto industry insurance coverages you may need to protect your business that you may not have considered.
1. Dealers Open Lot
If your auto industry business is engaged in vehicle sales, you may need Dealers Open Lot insurance. This coverage protects your business against losses involving vehicle inventory damage. Often there is a collision coverage component protecting against damage caused to a vehicle by collision with another vehicle or object, as well as damage caused by an overturn incident. Non-collision losses to dealer inventory are also sometimes included under this coverage. Hail damage is one example.
Dealers Open Lot coverage is designed to pay for repairs to the damaged vehicle or its equipment, up to the policy limits. This coverage is most commonly acquired by dealerships for passenger vehicles, such as cars, trucks and SUVs. But any type of vehicle can be covered under an open lot policy, including antique vehicles, motorcycles, ATVs, commercial and industrial vehicles, tractors and other farm equipment.
2. False Pretense
If you face risk from customers engaging in dishonesty, this is the coverage that can protect you. Unfortunately, fraud is a common issue for many auto industry businesses, where valuable vehicle assets and large sums of money regularly change hands. False Pretense coverage is a form of fraud protection specifically designed for the industry.
False Pretense protection covers a range of scenarios. If a fraudster takes one of your vehicles out for a test drive and doesn’t return it or completes the purchase of a vehicle with what later turns out to be a fraudulent check, this coverage can help cover your business’s financial loss. False Pretense coverage can also provide protection in a situation where a customer sells your business a vehicle for which you discover they did not possess the legal title.
3. Drive Other Car
If you have dealership and your employees are frequently behind the wheel of different vehicles, adding Driver Other Car coverage is smart risk management. This coverage can be thought of as a form of company car insurance. Certain named individuals employed by the company, plus any resident spouse, are provided with non-owned auto coverage under the business’s commercial policy. This coverage can be especially useful when the vehicles in question will only be owned or leased by your business on a short-term basis, with your employees frequently rotating through your fleet vehicles.
Driver Other Car protection is a must in certain circumstances. Often, executives and other employees furnished with company cars lack their own personal auto coverage because they own no other cars. Even if they do have their own coverage, the limits may be insufficient to protect your business as the owner and furnisher of the vehicle. If the employee or their spouse were to be found at fault in an accident, this coverage can protect the employee and your business and pay for any third-party damages or injuries.
4. Driveaway Collision
If your business ever transports vehicles distances of over 50 miles, you may want to consider adding Driveaway Collision coverage. This coverage add-on broadens the standard collision coverage found in most policies, which comes with an exclusion limiting protection to a 50-mile radius of your business premises. Notably, this 50-mile limit for pickup and delivery can apply even when an accident occurs within the 50-mile radius, if the start or end point of the journey was greater than 50 miles from your business premises. Driveaway Collision removes this exclusion, providing greater protection for your business operations.
Driveaway Collision coverage most often comes into play when a dealer is delivering a vehicle to a buyer’s location or picking up a newly purchased vehicle from an auction house. However, trips to and from storage lots or repair facilities and between car lots can also apply. Dealers, garagekeepers and aftermarket industry businesses can benefit from this coverage.
5. Business Interruption
If your business experiences a significant loss and is forced to cease operations, Business Interruption coverage can be a lifesaver. Also called Business Income and Extra Expense insurance, Business Interruption can provide funds to pay for certain business costs during a shutdown to recover from a fire, natural disaster, theft or vandalism.
Business Interruption coverage is intended to help businesses avoid the worst outcomes when they have a serious claim that causes a prolonged business closure. FEMA reports up to 40 percent of businesses are unable to reopen after a disaster, while another 25 percent fail within a year. Business Interruption coverage provides the necessary funds to continue paying for rent, payroll, taxes and other essentials while you recover.
6. Lockton Affinity Aftermarket
If your business faces the challenge of finding the necessary coverages to protect against common aftermarket exposures, this insurance could be for you. Lockton Affinity Aftermarket offers a combination of policies and limits unique to the market and enhanced beyond what you will find elsewhere. This is package protection made for businesses in the aftermarket industry, including general repair, auto body and collision shops, franchise tire dealers with general repair, parts retailers and distributors, incidental auto sales and more.
The Lockton Affinity Aftermarket Insurance Program provides protection including Technician Errors and Omissions, Employee Tool coverage, Customer Complaint Defense, On-Hook coverage, Dealers Errors and Omissions (with False Pretense coverage) and Employment Practices Liability insurance. These are coverage options often excluded from other insurance plans and come with limits that meet or exceed typical industry standards. All that’s required to receive a quote for your business is the completion of our simple 5-minute price indication request.
Next Steps
Insurance in the auto industry can be tricky. Businesses like yours face risks that many other industries don’t. The proper coverages can help protect your business and ensure you’ll be ready for the unexpected. For more tips on aftermarket business risk management, visit Lockton Affinity Aftermarket today.
