Auto dealerships require a specialty insurance program that most commercial lines agents are not familiar with. Standard GL forms are inadequate — dealerships need garage liability. Standard property forms don't cover lot inventory — dealers need dealers open lot. Customer vehicles in service are not covered by either — garagekeepers fills that gap. And EPLI exposure at auto dealers is among the highest in commercial insurance. Understanding these specialty coverages is what allows an agent to actually protect a dealership client.
Dealers Open Lot (Physical Damage)Covers the inventory of vehicles on the dealership lot against physical damage — hail, wind, flood, vandalism, theft, and collision. This is the highest-cost line for most dealerships and the one most commonly under-insured. Inventory values fluctuate weekly; the policy must keep pace with the actual lot inventory value. Many open lot policies are on a reporting form basis requiring monthly inventory reporting.
Garage LiabilityThe commercial GL equivalent for auto dealers and service operations. Covers bodily injury and property damage arising from the dealership's operations — customer injuries on the premises, damage caused by a salesperson during a test drive, or property damage from the service department. Garage liability is the required form for automotive businesses — a standard CGL form is often inadequate for dealership operations.
Garagekeepers Legal LiabilityCovers damage to customer vehicles in the dealership's care, custody, and control — in the service bay, on the lot for service, or in a storage area. If a customer's vehicle is damaged while being serviced, or stolen from the dealership's lot during service, garagekeepers coverage responds. Without it, the dealership is exposed to the full replacement cost of the customer's vehicle.
Employment Practices Liability (EPLI)Auto dealerships consistently rank among the highest EPLI exposure businesses due to a predominantly male sales culture, high employee turnover, commission-based compensation disputes, and frequent allegations of harassment and discrimination. EPLI is not optional for a dealership with more than 5 employees — it is one of the most-claimed lines in the auto dealer class.
Workers' CompensationDealership employees face diverse WC exposures — service technicians working with jacks, lifts, and power tools; lot attendants moving vehicles; detail staff using chemical solvents; and salespeople exposed to ergonomic hazards. WC must cover all classifications accurately, from office staff to technicians.
Commercial PropertyCovers the dealership building, showroom contents, parts department inventory, office equipment, tools, and signage. Many dealerships lease their real estate, requiring tenant's improvements and business personal property coverage. Parts inventory can be substantial and should be valued at replacement cost.
Commercial UmbrellaAuto dealerships with a test drive accident resulting in serious injury face significant liability. A customer fatally injured during a test drive, a collision with a pedestrian, or a major premises liability incident can produce verdicts exceeding underlying policy limits. Umbrella coverage is standard for any franchise dealership.
Cyber LiabilityDealerships collect extensive customer PII — Social Security numbers for financing applications, bank account data, driver's license information, and credit data. A breach affecting 500 customers triggers regulatory notification obligations. Manufacturer-required DMS (dealer management system) connectivity increases cyber exposure for franchised dealerships.
ACORD 125 — Commercial Insurance ApplicationPrimary submission document for the dealership account. Captures dealership type (new, used, franchise, independent), years in business, average lot inventory value, and prior coverage history. Loss runs for dealers should cover all lines — open lot, garage liability, and garagekeepers.
ACORD 126 — Commercial General Liability SectionRequired, though for dealerships the garage liability form is typically the operative document. Must describe all dealership operations — sales, service, body shop, parts, quick-lube, detail, rental car. Each operation affects underwriting.
ACORD 130 — Workers Compensation ApplicationRequired for WC. Must correctly classify all dealership employee types — office/clerical (8810), auto salespersons (8748), service technicians (8380 or 8390), parts (8046). Each classification carries different rates.
ACORD 140 — Property SectionRequired when quoting commercial property for the dealership building, showroom, parts department, and service department. The open lot coverage typically uses a separate dealers physical damage form — ACORD 140 covers the real property and business personal property.
→Is the dealership new, used, or both? Is it franchised (OEM) or independent?
→What is the average number of vehicles on the lot and the average lot inventory value?
→What is the average value per vehicle on the lot?
→Does the dealership sell new vehicles, used vehicles, or certified pre-owned?
→Does the dealership have a service department? Does it service vehicles not sold by the dealership?
→Does the dealership have a body shop?
→Does the dealership have a quick-lube or oil change operation?
→Does the dealership have a parts department?
→Does the dealership offer rental vehicles?
→What is the annual new vehicle sales volume and used vehicle sales volume?
→What is the total annual service department revenue?
→How many employees are in each department — sales, service, parts, body shop, admin?
→Does the dealership offer in-house financing or insurance products?
→What is the average garagekeepers exposure — how many customer vehicles are on the lot for service at any time?
→Has the dealership had any open lot losses in the last 5 years — hail events, theft, floods?
→Has the dealership had any test drive accidents or garage liability claims?
→Has the dealership had any EPLI claims or DOL/EEOC complaints?
→What OEM franchise agreements are in place, and do they require specific insurance limits?
→Does the dealership use a dealer management system (DMS) connected to OEM networks?