Do you have clients that want to start up used auto dealerships? Or perhaps some who have been operating used car lots for a few years?
A used auto dealership can be a profitable and rewarding venture, particularly for those who love cars and have a knack for sales. But like all businesses, used car dealerships come with some risks and potential liabilities.
For clients eager to get into the business, getting used auto dealership insurance is a must. But they also need to know the inherent risks in the industry to manage them effectively. Among the most common risks to look out for are:
- Property risk
- Crime
- Auto dealers’ exposures
- Automobile risk
- Garagekeepers’ risk
Managing used auto dealership risks
Used auto dealerships are typically a hub of activity, with plenty of activities going on throughout the day. Apart from managing vehicles, there are also customers and employees to consider. With a repair center added to the mix, there are many potential risks and liabilities to deal with, any of which could result in costly claims and lawsuits.
How can your clients manage these risks? How can they operate their business and ensure their continued profitability while avoiding liability? Below, we detail potential risks and how to deal with them.
Property risk
The property on which a car lot is located is just as valuable as the vehicles on it. Therefore, your clients need to protect this essential asset with the appropriate insurance policy.
Property-related risks are an even bigger possibility if your clients offer repair services. Doing repair work on the premises usually means plenty of flammable materials around, including oil, paint, lubricants, degreasers, and the like. Your clients will have to ensure that these are safely stored away when not in use and don’t pose any hazards to customers and employees.
Crime
Coverage for loss or damages resulting from crime is part of most insurance policies. It is especially important for owners of used auto dealerships to get insurance because of the cash nature of their business.
Apart from theft and burglary, insurance also protects your clients from crimes committed by employees. However, even with insurance, used car lot owners should implement preventive measures such as conducting background checks on prospective employees, monitoring inventory, and generally keeping a close watch on the business.
Auto dealers’ exposures
Welcoming clients to a car lot always entails a certain degree of risk. However, accidents can occur unexpectedly, whether caused by vehicles or something out of place on the premises. This is why it is just as essential to get proper insurance as it is to address any potential hazards.
Automobile risk
Of course, your clients will need safeguards against automobile-related risks. These usually arise from having employees and prospective customers test driving the vehicles.
Employees tasked with operating vehicles should have valid licenses, and the cars should be in good condition with all the necessary paperwork. Used car lot owners should also have protocols in place for the safe operation of these vehicles.
Test Drives should consist of a right hand test route, 90% of turning accidents occur while making a left turn. An employee should accompany the customer o a test ride to answer questions on the vehicle and ensure the vehicle is returned properly.
Garagekeepers’ exposures
As owners/operators of used car dealerships, your clients assume a certain degree of risk when they offer garage keeper services. This typically involves taking care or control of customers’ vehicles or otherwise assuming custody. This usually happens when cars need to be repaired and are taken to a service station.
About Aegis Specialty Dealer Division
Your used auto dealership clients will benefit considerably from the risk protection that K2 provides. Apart from the full range of insurance coverages, K2 also offers an ACH payment system that bills your clients directly. Call us today at (866) 429-1638 to find out how you can partner with the leading name in auto dealership insurance.
