How can an umbrella insurance policy benefit used auto dealers who are looking to build their dealerships? Getting the right used car dealership insurance is essential in this business, considering the significant financial investment necessary to get started.
The Umbrella Insurance Policy and How It Works
Getting the appropriate insurance is a crucial first step for establishing a used car dealership.
Useful Insurance for Auto Dealers
But what type of insurance does a used auto dealer need? Standard auto and property insurance are obvious choices. Likewise, these protect the inventory and car lot against possible losses and damage from extreme weather, other acts of nature, criminal activity, and vandalism.
Most used car dealers also carry general liability insurance. Additionally, it protects them against injury claims and lawsuits arising from third-party losses or damage on their property. Given the potential for vehicular accidents and injuries, general liability coverage can benefit used car dealers.
Umbrella Insurance Policies Defined
As helpful as these other policies are, used auto dealers may need another type of insurance. Moreover, your clients need to understand that despite their comprehensive coverage, these insurance options have limitations. They may not cover every potential risk factor, or their coverage may not be sufficient to handle every untoward incident.
It is where umbrella insurance can step in. As the name implies, umbrella insurance offers added insurance coverage for claims or liabilities that standard auto or property insurance won’t cover. They come with higher limits and extend the coverage provided by standard auto and property insurance policies.
The extended coverage offered by umbrella insurance policies typically starts at $1 million. They also cover libel, slander, and other liabilities that other insurance policies don’t cover. Also known as “personal umbrella insurance”, they can be helpful supplements to insurance policies that most used car dealerships already have.
Quick Facts About Umbrella Insurance
Here are some quick facts about umbrella insurance policies:
- Most cost anywhere from $150 to $300 per year.
- They are useful for car dealers whose current insurance limits are lower than the total value of their assets.
- Umbrella policies provide coverage beyond the scope of standard liability insurance.
- They cover libel, slander, psychological harm, and even mental anguish.
- They do not cover injuries or property damage incurred by the policyholder .
- Coverage limits start at $1 million but can be as high as $10 million
Is Umbrella Insurance Essential for a Used Auto Dealer?
Strictly speaking, umbrella insurance isn’t necessary for used auto dealers. In many cases, standard auto and property insurance provides sufficient coverage for most of their needs, while personal liability covers the rest.
But auto dealers with high net worth who want to protect their future earnings would do well to consider getting the added coverage that umbrella insurance provides. And if the limits of their current liability insurance fall short of the total value of their assets, getting an umbrella insurance policy is a no-brainer.
Here’s a good way for your client to determine if personal umbrella insurance is worth considering:
Have them assess their assets by calculating their home equity, personal savings, various accounts (including retirement and brokerage), the college funds of their offspring, and other investments. If the total is more than the limits of their current policies, getting umbrella insurance is advisable.
About K2 Specialty Dealer Insurance Services
Aegis Specialty Dealer Division strives to create a leading underwriting and distribution franchise in the program insurance market. We’ve bridged the gap between agents and client payments with our efficient ACH payment system. Partnering with us gives agents the advantage of ACH payment capability that allows for direct billing through the firm. Call us today at (866) 429-1638 to find out how you could partner with K2 so you could offer top-tier insurance coverages and modern features to your clients.
