Mistakes That Increase the Insurance Cost for a Car Dealership
- Nate Jones, CPCU, ARM, CLCS, AU
- 3 days ago
- 2 min read
Controlling the insurance cost for a car dealership is essential, especially when premiums are influenced by high‑value inventory, customer test drives, weather exposure, and employee risks. Many dealership owners unknowingly make mistakes that can drive premiums up year after year. Avoiding these errors not only protects your budget, it also strengthens your long‑term risk profile.
Here are the most common mistakes that lead to higher insurance costs for new and used dealerships.
1. Inaccurate Inventory Reporting
Dealer’s Open Lot (DOL) coverage is heavily based on your monthly average and maximum inventory values. Incorrect reporting, whether too high or too low, can cause issues. Over reporting leads to unnecessary premium increases, while under reporting may lead to uncovered losses. Use accurate monthly averages and keep documentation ready for underwriting.
2. Poor Lot Security
A dealership with weak security is a red flag for insurance carriers. Common mistakes include:
Lack of fencing
Poor lighting
No surveillance cameras
Weak key control procedures
Unlocked vehicles at night
These risks increase the likelihood of theft and vandalism, driving premiums higher. Dealership owners can explore industry security recommendations through resources like state automotive dealer associations.
3. Not Keeping Loss Runs Clean
Your claims history is one of the biggest factors affecting your car dealership business insurance quote. Frequent claims, especially preventable ones, signal higher risk.
Improperly handling:
Employee accidents
Test drive incidents
Customer vehicle damage
Weather‑related claims
can lead to long‑term premium increases. Training staff, documenting procedures, and improving safety protocols can significantly reduce claims.
4. Choosing the Wrong Limits or Deductibles
Many dealerships select limits or deductibles without understanding how they impact pricing. Common mistakes include:
Choosing low deductibles that raise premiums
Selecting limits that exceed actual needs
Forgetting to adjust limits as inventory changes
Balancing deductible affordability with reasonable coverage can help reduce unnecessary costs.
5. Not Working With a Dealership‑Specialised Agency
One of the biggest, and costliest, mistakes is working with a general insurance agent rather than a dealership specialist. Generalists may:
Place coverage with the wrong carrier
Miss dealership endorsements
Fail to optimise deductibles
Provide incomplete coverage
A specialised agency understands dealership operations and knows which carriers provide the best rates for garage liability, DOL, garage keepers, and workers’ comp.
Get the Right Car Dealership Insurance at the Right Price
Not every insurer understands dealership operations, and your premium can increase due to claims, security issues, incorrect limits, and underwriting mistakes. Wexford Insurance partners with national carriers that specialise in dealership risks, helping owners secure the best limits, deductibles, and policy structures, without overpaying.
👉 Request your car dealership business insurance quote from Wexford Insurance today and make sure your dealership, and every vehicle on your lot, is properly protected.
