What Insurance Do I Need for Auto Dealers in Connecticut?

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What Insurance Do I Need for Auto Dealers in Connecticut?

See how we're different

Running your own car dealership can be really hard. Auto dealers face unique issues every now and then. Being a business owner is not easy; you are in charge of taking tough decisions. You don’t just have to ensure that the business runs smoothly, but you also have to be prepared for the worst that the future might hold. A great way of minimizing future risks is to invest in insurance policies that will safeguard your business and ensure that from inventory to property, everything will be protected. 


Auto dealers require insurance that can:

  • Minimize dealership risk
  • Protect employees 
  • Protect your property and inventory
  • Provide coverage for lost income in case of any disruption 

Here are the ten most important types of insurance for auto dealers in Connecticut that you might want to consider to be prepared for the worst: 


Commercial General Liability Insurance

Commercial general liability insurance provides coverage for bodily injury, advertising injuries, copyright infringement, and reputational harm. It gives you a broad level of insurance protection from events that you might not expect to happen.


Benefits of Commercial General Liability Insurance


  • Protects your company from the damage you or employees have caused to someone else’s property.
  • Commercial general liability insurance provides coverage for bodily injuries suffered by customers on your premises. From a customer falling down the stairs to slipping on a wet floor—it provides coverage for all third-party body injuries.
  • It covers your legal liability for offenses arising out of the advertising of your business including copyright infringement, slander, and libel. 
  • Having commercial liability insurance implies that you are prepared for all the what-ifs, take your client’s health seriously, and intend to be in business for a long time.
  • It mostly provides coverage for legal fees including attorney fees, settlements, and court costs. 


Let’s say a customer slipped at your car wash and suffered a fracture. There’s a chance that you will be blamed for that injury. If that person decides to sue, you will have to pay for the medical expenses and attorney’s fees—which can be really heavy on the pocket.

Commercial general liability insurance provides coverage for unexpected events that might happen on your premises.

Having protection will lessen the possible threats that can interrupt your business and cost you a fortune. Commercial general liability prepares you for the aftermath.

However, commercial general insurance liability only provides coverage for expenses when someone other than your employees gets injured on your premises. You need workers’ compensation insurance to provide medical coverage to employees. 

The cost of general liability insurance depends on your industry, the number of employees you have, and your business location. On average, it costs less than $50 a month. 


Business Interruption Insurance

Most business owners need business interruption insurance. It covers you for lost income during periods you can’t operate your business normally. It also pays for extra expenses when business is affected by covered perils, including fire, wind, theft, and falling objects. 


Benefits of Business Interruption Insurance


  • If your business was interrupted because of damage caused by fire, theft, or vandalism, business interruption insurance will provide coverage for income your business would have earned during that period. 
  • In the event of a disruption, the insurance will cover the expenses of relocating your business to a temporary location.
  • If your premises are unstable following a natural disaster or theft, it is likely that you won’t be able to pay your employees. In this case, business interruption policies ensure that you make payroll to avoid losing your employees.
  • Even if your business is not fully operating, you will still pay loan payments if you have any outstanding loans. Business interruption insurance will cover your loan payments until you are able to fully operate again. 


Generally, insurance covers tangible items, such as machinery and equipment, but what happens when a fire damages your business, and you have to close your business temporarily? Who pays for the lost income, rent, loan payments, taxes, and employee payroll? Business interruption insurance does! 

Business interruption covers for your lost income and other expenses if the damage is caused by:

  • Fire and storm 
  • Theft 
  • Vandalism


Most business interruption policies provide coverage for:

  • Employee wages
  • Taxes
  • Loan payments
  • Mortgage, rent, and lease payments
  • Relocation 
  • Commission


It doesn’t cover for damage caused by:

  • Flood or earthquake
  • Utilities 
  • Undocumented income


The cost of business interruption insurance depends on various factors. However, on average, it costs $40 to $140 per month or $500 to $1500 annually. 


Garage Keepers Liability Insurance


Garage keepers liability insurance is an optional coverage that auto businesses use to protect clients’ vehicles from damages caused to them under their possession. 


Benefits of Garage Keepers Liability Insurance


  • Garage keepers liability insurance for auto dealers provides coverage for the damage caused to clients’ vehicles either by negligence or mistake
  • On average, the policy costs around $1000 to $1300, which is not that costly


Garage keepers liability insurance provides coverage for clients’ vehicles if the damage is caused by:

  • Fire
  • Theft
  • Vandalism
  • Weather
  • Collision 


It offers three primary forms of protection, including:

  • Legal liability: It is the most common type of garage keepers liability coverage that covers the cost of damage caused to a client’s vehicle by an employee who is found legally liable—for example, your mechanic wrecks the car while test driving. 
  • Direct primary coverage: It covers the damage caused to the client’s vehicle, regardless of whose mistake or negligence it may have been. Direct primary coverage makes sure that the client’s vehicle is protected—doesn’t matter if the damage is caused by weather, theft, or collision. 
  • Direct excess: It functions similarly to a direct primary coverage policy except for the fact that if the insured is not found liable, the coverage will pay in excess of any amount collectible under the owner’s policy. 

The amounted premium is affected by several factors, but generally, garage keepers liability insurance costs around $1000 to $10000 annually. 

Garage keepers liability doesn’t cover claims and damages involving:

  • Faulty workmanship
  • Radar detectors
  • Loss of CDs and DVDs
  • Theft by you or your employees
  • Defective material
  • Loss of stereo equipment
  • War

Businesses that require garage keepers liability insurance include:

  • Towing companies
  • Car dealerships
  • Auto repair shops
  • Valet services
  • Car body shops
  • Service stations
  • Car washes
  • Detailers
  • Electronic installers
  • Parking garages
  • Oil change services 


Commercial Property Insurance


From electricians to clinics and auto dealers, every kind of business needs commercial property insurance. 


Benefits of Commercial Property Insurance

  • It costs thousands of dollars to set up an office. Imagine losing it all because of the property catching fire. Commercial property insurance protects the company’s physical assets, including equipment, inventory, and office supplies. 
  • It covers the company against the damages caused by natural disasters 
  • If your property has suffered damage, commercial property insurance will cover the cost of repair, replacement, and unexpected losses.
  • Some policies also cover the equipment that employees carry to work-related trips.
  • Some policies also cover the losses suffered by the business for being closed temporarily. 


Commercial property insurance protects your:

  • Building
  • Equipment and machinery
  • Inventory
  • Furniture


The cost of commercial property insurance depends on:

  • The value of the business property
  • The coverage limit you choose
  • Your business location 


Auto dealers need commercial property insurance to ensure that they have financial backup against the damages caused to their property. Commercial property insurance protects against damages caused by fire, theft, vandalism, volcanic eruption, lighting, and damage from vehicles or airplanes. Following are the costs covered by commercial property insurance:

  • Repair cost
  • Replacement cost
  • Unexpected losses 
  • Business interruption coverage


On average, commercial property insurance costs $40 to $50 a month or $700 to $755 annually. Generally, commercial property insurance plans do not cover:

  • Termites and insect damage
  • Rust 
  • Mold 
  • Damage caused by agricultural operations
  • Sewer backups
  • Earthquake and smog
  • Seeping groundwater
  • Floods and drains 
  • Damage caused by acts of terrorism 


Errors and Omissions (E&O) Insurance


Auto dealers deal with giving professional advice to their customers, making errors and omissions insurance a must-have. 


Benefits of Errors and Omissions Insurance

  • It provides coverage for legal fees including attorney fees, court judgment, settlements, and court costs 
  • Some clients only prefer businesses that have E&O coverage to be able to trust the companies 
  • Clients can sue your company over perceived errors whether or not you have done anything wrong—errors and omissions insurance will protect your company from the claims of negligence, omissions, and incompetent services.
  • If you have ever been sued, you know how stressful and upsetting it can be. There’s always a chance that you will be found liable. Having errors and omissions coverage means you have an extra layer of protection if you lose your case.


Errors and omissions insurance protects the company against claims of:

  • Negligence 
  • Omissions 
  • Misrepresentations 
  • Inaccurate advice 
  • Violation of good faith
  • Inadequate work


E&O policies usually cover legal fees associated with the claim including attorney fees, settlements, loss of earnings, and court costs. It only covers claims if:

  • They are filed within the policy period
  • The damage occurred after your retroactive date


E&O policies do not cover damages caused by illegal activities, bodily injury, work-related injuries, intentional harm, and property damage. On average, errors and omissions insurance costs $500 to $1500 per employee. 

It allows you to replace the unpredictable risk of getting sued and sends a strong message to your client that your company is reputable and trustworthy. E&O policies vary slightly across different insurance providers, but generally, they provide coverage against negligence, wrongful advice, and misrepresentation. 


Workers’ Compensation Insurance


Regardless of the kind of business you have, you need workers’ compensation insurance to protect your employees and provide benefits like medical, rehabilitation, and disability benefits. The coverage is mandated by each state, which means it is necessary for companies to provide medical and wage benefits to their employees who get injured or sick at work. 


Benefits of Workers’ Compensation Insurance

  • It sends a strong message to your clients that you care about your employees’ health and consider them vital assets to your business  
  • It gives employers the option to choose additional coverage, such as disability benefits and coverage for injuries resulting from a terrorist attack
  • Workers’ compensation insurance helps a business avoid having to pay fines when accidents occur on the business property 
  • If the employee dies due to a work-related injury, death benefits are paid to the worker’s family, including the funeral and burial costs 


Workers’ compensation insurance is a type of social insurance which relies on the contract between employers and laborers. It usually covers:

  • Medical expenses 
  • Disability benefits 
  • Death and funeral services 
  • Lost wages
  • Ongoing care costs 


The cost of workers’ compensation insurance depends on a variety of factors, including:

  • The type of work done by the employee/s
  • Industry 
  • The annual income of employee/s 


On average, small businesses pay a premium of $2000 to $3000 annually. The premium increases when there’s an increase in employees’ payrolls. 


Final Thoughts

We can’t predict the future, but we can prepare for worst-case scenarios. Running your own car dealership is not a piece of cake. From working on your marketing strategies to ensuring that the business runs smoothly without disruptions, everything can be challenging. That’s why it is necessary for every business to invest in quite a few insurance plans, because then your risks become their risks. 

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