What Car Dealerships Should Know About Insurance Deductibles and Limits
- Nate Jones, CPCU, ARM, CLCS, AU
- 3 days ago
- 2 min read
When securing car dealership business insurance, two of the most important components to understand are deductibles and policy limits. These factors directly impact how much you pay in premiums and how much coverage your dealership actually receives in the event of a loss. Whether you run a new or used car dealership, understanding these terms can help you choose better coverage and control your long‑term insurance costs.
1. What Is a Deductible?
A deductible is the amount your dealership pays out of pocket before the insurance company pays the rest of the claim. Deductibles are commonly used in:
Higher deductibles typically lower the insurance cost for a car dealership, while lower deductibles reduce out‑of‑pocket expenses at claim time. Dealerships should choose deductibles based on cash flow, risk tolerance, and historical claims.
2. Understanding Insurance Limits
Your insurance limit is the maximum amount your policy will pay for a covered loss. Dealerships should pay close attention to limits on:
If limits are set too low, your dealership could be under insured, especially after a major storm, theft, or fire. If limits are too high, you may end up overpaying for coverage you don’t need. To understand typical limit structures, dealership owners can review commercial insurance basics through resources such as the Insurance Information Institute.
3. Why Limits and Deductibles Affect Pricing
Carriers evaluate risk based on how much they may need to pay during a claim. Factors that influence pricing include:
Higher limits = higher premiums
Lower limits = lower premiums
Higher deductibles = lower premiums
Lower deductibles = higher premiums
That’s why choosing the right balance is essential. You want meaningful protection without unnecessary cost.
4. Typical Deductibles for Car Dealership Policies
While every carrier is different, common deductible ranges for dealerships include:
$1,000–$5,000 for Dealer’s Open Lot
$500–$2,500 for Garage keepers
$1,000+ for property insurance
Carriers may offer lower deductibles, but at a significantly higher premium.
Get the Right Deductibles and Limits for Your Dealership
Not all insurance carriers specialise in dealership risks, and your pricing will vary depending on your inventory value, security measures, claims history, and deductible choices. Wexford Insurance partners with top‑rated companies that understand dealership operations, helping owners secure the right limits, deductibles, and policy forms tailored to their business.
👉 Request your car dealership business insurance quote from Wexford Insurance today and make sure your car dealership is fully protected.
