What Impacts the Insurance Cost for a Car Dealership?
- Nate Jones, CPCU, ARM, CLCS, AU
- 3 days ago
- 2 min read
If you own a new or used car dealership, understanding what drives your insurance costs is essential. Car dealership insurance is unique, your business handles customer test drives, high‑value inventory, employees, and property exposure. Because of these risks, insurance cost for a car dealership can vary widely from one dealer to another. Here are the key factors carriers evaluate when calculating your premium.
1. Dealership Location and Crime Rate
Insurance companies assess ZIP code risk when pricing policies. Dealerships located in areas with:
Frequent vandalism
More severe weather patterns
tend to pay more. External resources like local crime statistics or data from your state’s Department of Insurance can help you understand how your region compares.
2. Inventory Value and Dealer’s Open Lot (DOL) Exposure
Your monthly average and maximum inventory value significantly impact cost. The more cars on your lot, the more a carrier must insure. Factors evaluated include:
Vehicle values (new vs. used)
Storage methods
Protection against storms, theft, or hail
Dealerships with higher-value inventory or outdoor storage often face increased premiums.
3. Security Measures
Strong security can reduce insurance costs. Carriers look closely at:
Fenced lots
Surveillance cameras
Alarm systems
Lighting
Key control procedures
Enhanced protection can lower the risk of theft and vandalism, which often results in lower premiums.
4. Claims History
A clean loss history almost always leads to better pricing. Frequent claims, especially related to test drives, theft, or property damage, signal risk to insurers. Carriers may request five years of loss runs before offering a car dealership business insurance quote.
5. Number of Employees and Payroll
Workers’ compensation and garage liability rates depend heavily on employee count and their job duties. Technicians, sales staff, and porters all carry different risk levels, impacting your overall premium.
6. Dealer Operations and Services Offered
Dealerships offering additional services, such as auto repair, towing, or bodywork, have more exposure. These activities can increase the cost of coverage like:
Get the Right Car Dealership Business Insurance at the Right Cost
Not every insurance company specialises in dealership coverage, and your premium can vary depending on location, security, inventory, services offered, and claims history. Wexford Insurance partners with top-rated carriers that understand car dealership operations, helping owners secure the right limits, deductibles, and policy structure for their business.
👉 Request your car dealership business insurance quote from Wexford Insurance today and make sure your dealership, and every vehicle on your lot, is fully protected.
