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The size of your dealership’s insurance program should match the size of your business

The size of your dealership’s insurance program should match the size of your business

Dealership acquisitions present numerous challenges. One issue often overlooked is the way growth affects the Dealership’s insurance program. Not adjusting your dealership policy as you grow exposes you to increased risk and potential lost income.

It is ironic how often we see Dealer Groups who are solidly in a growth mode maintain their “small store’’ insurance programs. This mindset can jeopardize the Dealership’s financial stability by ignoring the increased risk and the enhanced coverage options available.

As well, using standard or off-the-shelf insurance programs actually increases the premium and denies the entity the ability to develop and utilize sophisticated Risk Management processes which can dramatically improve the Dealership’s bottom line.

Just as a newly-acquired franchise or group increases Revenues and Personnel, the insurance program of the acquiring entity should grow as well. Dealers understand the need for more advanced IT systems and management teams to handle growth — moving to a more sophisticated insurance program makes sense as well.

Within the Dealership insurance arena, there are ‘’levels’’ of available coverage programs. For the single point and smaller dealer groups with employee counts under 250, the industry service normally comes from a local agent or regional representative of the Direct Writers. These programs are typically serviced by regional offices that handle both underwriting and claims. These offices also issue endorsements and certificates and provide a level of service on an ‘’as needed’’ basis.

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Steven P. Gibson is the President of Dealer Risk Services, Inc., a Florida-based firm that provides insurance expertise to the Automotive Industry. He can be reached at sgibson@dealerriskservices.com and 321-733-6253.

Automotive Buy Sell Report is the first website and weekly report to give participants in the automotive dealership buy sell industry a place to find news and information regarding the purchase, sale and valuation of automobile dealerships, and state-by-state listings of Resources.


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