Auto dealers require a specialty insurance program that standard commercial lines cannot accommodate. Dealers open lot coverage for vehicle inventory, garage liability for test drives and service operations, and garagekeepers for customer vehicles in service are products that simply don't exist in standard BOP forms. The FTC Safeguards Rule now requires formal cybersecurity programs for dealers with F&I operations, adding a regulatory compliance dimension to the cyber exposure. Every element of a dealer program requires specialty underwriting and carrier appetite that differs from standard commercial lines.
Dealers Open Lot (DOL) / Inventory CoverageThe foundational property coverage for any auto dealer. Dealers open lot insurance covers the dealer's vehicle inventory — new and used cars, trucks, motorcycles, or RVs on the lot — against fire, theft, hail, flood, and collision. This is not standard commercial property — it is a specialty inland marine form designed for dealer inventory. The total inventory value fluctuates daily as vehicles are sold and acquired; the policy must be structured to accommodate peak inventory values at floor plan audit periods.
Garage LiabilityCovers the auto dealer for bodily injury and property damage arising from the garage operations — including liability for vehicles in the dealer's care during test drives, service operations, and vehicle delivery. Garage liability replaces the standard GL policy for auto dealers and includes garagekeepers coverage (for customer vehicles left for service). The test drive exposure — a customer who causes an accident while test driving an inventory vehicle — is covered under garage liability.
Garagekeepers Legal LiabilityCovers customer vehicles that are left in the dealer's care for service work, oil changes, warranty repairs, and detailing. When a customer's vehicle is damaged while in the dealer's service bay — a fire in the service department, a technician who backs a customer's car into another vehicle, or hail that damages cars stored overnight in an open service lane — garagekeepers covers the resulting customer claim. Coverage can be written on a direct primary, direct excess, or legal liability basis, each with different trigger requirements.
Workers' CompensationAuto dealer employees include salespeople, finance and insurance (F&I) managers, service technicians, parts department staff, detailers, and lot attendants. WC for auto dealers must address the service department exposure (shop injuries from lifts, tools, and vehicle falls), the lot exposure (moving vehicles, deliveries, lot accidents), and the test drive coordination exposure. WC classifications for auto dealers include 8748 (sales), 8380 (service technician), and 8810 (clerical).
Commercial Crime / Employee DishonestyAuto dealers are exposed to significant employee theft risk — both in the sales process (F&I fraud, contract falsification, down payment theft) and in the parts and service department (parts theft, fraudulent warranty claims). Crime coverage for auto dealers must specifically address employee theft, funds transfer fraud, and forgery. Dealers who process financing in-house are also exposed to falsification of loan applications and forged customer documents.
Cyber LiabilityAuto dealers collect significant customer personal and financial information — social security numbers, income documents, bank account information, and credit data as part of the F&I process. FTC Safeguards Rule compliance (updated 2023) requires dealers to implement formal information security programs protecting customer financial data. A data breach at a dealership that exposes customer financial information triggers FTC Safeguards Rule liability, state breach notification requirements, and potential class action exposure. Cyber liability for auto dealers should include regulatory defense.
ACORD 125 — Commercial Insurance ApplicationPrimary submission document for auto dealer accounts. Capture dealer type (franchised new car dealer, independent used car dealer, motorcycle dealer, RV dealer, heavy truck dealer), new vs used vehicle split, total inventory value, annual vehicle sales volume, whether the dealer operates a service department, and whether the dealer provides financing in-house.
ACORD 126 — Commercial General Liability SectionRequired for garage liability. Describe all operations — new and used vehicle sales, service and repair, parts sales, F&I operations, detailing, body shop (if applicable), and rental vehicles. Each operation carries different liability characteristics. Dealers who operate a body shop in addition to sales and service have additional GL exposures.
ACORD 130 — Workers Compensation ApplicationRequired for WC. Auto dealer employees must be classified by department — salespeople (8748), service technicians (8380), parts department (8380 or 8018 depending on state), detailers (8380), and clerical/office staff (8810). Service department WC rates are significantly higher than sales department rates.
→Is the dealership a franchised new vehicle dealer or an independent used vehicle dealer?
→What types of vehicles are sold — cars, trucks, motorcycles, RVs, heavy equipment?
→What is the total floor plan value of inventory — the maximum value at any point during the policy year?
→What is the split between new vehicle sales and used vehicle sales?
→Does the dealership operate a service and repair department?
→Does the dealership operate a body shop or collision repair center?
→Does the dealership have a detail department?
→Does the dealership handle financing in-house through its own F&I department, or does it use third-party lenders only?
→Does the dealership offer vehicle rentals or loaner cars to service customers?
→What is the annual total vehicle sales volume in units?
→Where is customer vehicle inventory stored overnight — open lot, enclosed building, or a mix?
→Has the dealership had any inventory theft claims — vehicles stolen from the lot or during transport?
→Has the dealership had any employee theft or fraud claims?
→What security systems are in place — cameras, GPS tracking on inventory, lot lighting, guard service?
→Has the dealership had any FTC Safeguards Rule compliance assessment?