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Car Dealer Insurance: How Does It Work?

Car dealer insurance is a type of insurance specifically designed for car professionals, such as car dealers, garages and brokers. This type of insurance offers coverage tailored to the specific needs of these professionals who are exposed to various risks associated with their activity. Whether it is to protect their stock of vehicles, cover damage caused during road tests or protect themselves against the risks of professional civil liability, car dealer insurance plays a vital role in the preservation of assets and the continuity of the activities of professionals in this sector.

What is car dealer insurance and what guarantees does it provide?

Car dealer insurance is insurance specifically designed for car professionals, such as dealers, car brokers, garages or dealerships. It provides specific protection for their activities related to the sale, purchase and repair of vehicles.

The guarantees offered by car dealer insurance can vary depending on the specific needs of each company, but they generally include:

  • The civil liability guarantee: it covers material damage and personal injury caused to third parties in connection with business activity. For example, if a customer is injured in your car dealership.
  • The professional property warranty: it covers damage or theft of vehicles in the dealer’s fleet.
  • Operating loss coverage: this compensates the economic loss suffered by the trader in the event of a forced interruption of his activity following a covered loss (fire, water damage, etc.).
  • The legal guarantee: it covers the costs of a legal procedure (lawyer’s fees, court costs) in the event of a dispute with a customer or supplier.
  • Driver protection guarantee: it provides compensation in the event of an at-fault accident causing injury to the driver of the vehicle used in a professional context.
  • Breakdown and Towing Assistance Guarantee: it provides quick intervention in case of breakdown or accident for the vehicles used by the dealer.

It is important to remember that guarantees and conditions vary from one insurance company to another, so it is important to be well informed and to compare different offers before taking out car dealer insurance.

What are the criteria for taking out car dealer insurance?

In order to take out car dealer insurance, there are several criteria to take into account. We have listed the most common criteria below:

  • Car Dealer License: Most insurance companies require you to have a valid car dealer license to purchase this insurance.
  • Experience in the automotive industry: Some insurance companies may require you to have some experience in the automotive sector as a professional or entrepreneur.
  • Type of vehicles sold: Insurance companies can assess the risks associated with the types of vehicles you sell, such as used cars or high-end cars.
  • Geographical area: The geographical location of your activity can also be an important criterion for the insurance company, as certain places can pose a higher risk in terms of theft or accidents.
  • Claim history: Your history of previous claims may also be taken into account by the insurance company to assess your level of risk and determine the policy terms and rates.
  • Security measures: The security measures implemented in your business, such as an alarm system or surveillance cameras, can affect the insurance company’s risk assessment.
  • Sales volume: Some insurance companies may take into account your company’s annual sales volume to determine the level of insurance required.

As these criteria are bound to vary across insurance companies, it is advisable to contact the insurance companies directly to get specific information about the criteria for taking out car dealership insurance.

Is it mandatory to have car dealer insurance to carry out this activity?

In France, it is not mandatory to have a special insurance policy to operate as a car dealer. However, it is strongly recommended that you have adequate commercial insurance to cover the risks associated with this activity, such as damage to vehicles during storage or testing, theft, traffic accidents during test drives, etc. This insurance can also provide protection in the event of a dispute with a customer or supplier. It is therefore advisable to check with an insurance company that specializes in the automotive field to choose the best coverage according to the specific needs of the car dealer’s activity.

What is the difference between car dealer insurance and classic car insurance?

Since car dealer insurance is specifically designed for professional cars, such as dealers or used car salesmen, it offers coverage that is suitable for activities related to sales as well as car trading.

The main differences between car dealer insurance and classic car insurance are as follows:

  1. Vehicle coverage: Car dealer insurance can cover multiple vehicles at the same time, whether they are in storage or in transit. A typical car insurance policy usually only covers one vehicle at a time.
  2. Professional liability: Car dealer insurance may include professional liability that protects the trader in the event of damage caused by a vehicle sold or repaired.
  3. Legal protection: Car dealer insurance may include specific legal protection for disputes relating to the sale of cars.
  4. Commercial activities: Car dealer insurance can provide additional coverage for commercial activities such as transportation, import-export and storage of vehicles.
  5. Pricing: car dealers’ insurance premiums are generally based on the professional’s volume of activity and may vary depending on the number of insured vehicles, the annual turnover or the type of activity carried out.

And we cannot emphasize enough that it is essential for a motor vehicle professional to take out insurance tailored to their specific needs in order to be properly protected in their commercial activities.

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