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In addition to obtaining an auto dealer bond, North Carolina dealers are also required to purchase garage liability insurance in order to become licensed. Learn more about this policy below, and request a quote from Absolute Surety today.
Car dealers are required by the state of North Carolina to purchase comprehensive liability insurance covering their dealer plates as part of the process of becoming licensed to do business. While general liability insurance covers bodily injuries that non-employees suffer on the premises of an insured business, it falls short of covering all of the potential risks that are associated with the daily operations of a dealership or other auto-related business. For one thing, it does not cover damage to vehicles.
Commercial auto insurance covers damage to dealer-owned vehicles that occurs in the course of business operations, but it does not cover damage to or loss of customers’ vehicles. Clearly, general liability insurance and commercial auto insurance alone don’t provide comprehensive coverage for businesses that involve having custody, care, and control over customers’ vehicles.
Garage liability insurance, however, covers bodily injuries to non-employees or damage to property owned by another party, either on the dealer’s premises or during a test drive of a dealer-owned vehicle. And adding garage keeper’s coverage (typically as an endorsement to a garage liability policy), provides protection against damage to customers’ vehicles while they are being worked on, moved, towed, test driven by an employee, or parked on the premises. That includes damage caused by employees as well as from severe weather or natural disasters, vandalism, or theft.
Used car dealerships are required to have garage liability insurance. But even businesses that may not have to purchase this policy as a condition of licensing can benefit greatly from having it. Any business that involves the custody, care, and control of customers’ vehicles should certainly have garage keeper’s coverage. That includes dealerships and businesses such as:
Many auto dealers and auto-related businesses combine several important coverages into a comprehensive Business Owners policy, or BOP, that meets all of their liability insurance needs. For example, garage liability and garage keeper’s coverages may be combined with Worker’s Compensation and Defective Parts and Workmanship insurance. With this combination, any liability for damages—bodily injuries, property damage, and/or property loss—arising from business operations shifts from the policyholder to the insurance company.
North Carolina is a mandatory insurance state, which means that any auto dealer that requests a quote from or submits an application to an insurance company must be offered insurance coverage. However, insurance companies have the option of placing a garage liability insurance policy with North Carolina’s reinsurance facility, which charges the highest possible premium rates and places limits on the amount of liability insurance a dealer can purchase.
Referring coverage to the state reinsurance facility is particularly common with new dealerships that have little or no business track record and with dealers that offer their own financing because of the risks associated with the potential for repossession activities.
Certain choices made by the policyholder will have an impact on the cost of garage liability insurance, such as the policy limit (the maximum amount that will be paid on a claim), the size of the deductible chosen, and the specific coverages included.
You can rely on Absolute Surety to get you the best deal possible on the insurance you need for your dealership or repair facility. Request a quote today!