Of the thousands of dealerships we insure, very few dealers understand the coverages or how the coverages protect their business. Even worse, the agent they are using doesn’t understand the coverages either!
How can this be…I thought all licensed insurance agents are well rounded in a variety of different insurance product lines. The truth is most agents are highly educated in personal lines insurance, such as home and auto insurance. They rarely insure dealerships or know the coverages available to protect dealerships.
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Dealership Insurance – Furnished versus Non-Furnished Auto
A dealership may opt for a Furnished or Non-Furnished Auto. Furnished auto means the person listed on the policy can use the dealerships inventory for both business and personal use. This means the listed driver can take any of the dealerships inventory and drive it home, to the store, on vacation, just like having a personal automobile. They can use the auto for business use also, to-and-from the auction, repair shops, and test drives.
What’s great about having a Furnished Auto is you do not need to maintain personal auto insurance if the vehicle you are driving is owned by the dealership.
Having a Furnished Auto does cost more than a Non-Furnished Auto, because of the higher exposure to a loss. The costs vary depending on the driver information and state insurance laws.
The driver must be listed on the policy as having a Furnished Auto. The dealership can choose which employees have a Furnished Auto. If an employee without the furnished auto coverage takes a vehicle from the dealership inventory and has an accident in it while using the vehicle for personal use the insurance carrier has the right to refuse paying the claim, leaving the dealership to pay for the damages that resulted in the accident.
A Non-Furnished Auto means the dealership inventory can ONLY be used for business use, such as to- and-from the auction, vehicle repairs and test drives. In most cases the insurance carrier will want you to maintain personal auto insurance and may need to provide proof of personal auto insurance before the policy is bound.
Non-Furnished Auto is the cheaper of the two coverage options, because the insurance carrier has less exposure to a claim arising from personal use.
Which Coverage is Best for You
If you plan to drive the dealership inventory for personal, as well as business use, it is best to have a Furnished Auto. If you plan on maintaining personal auto insurance and only use the dealership inventory for business use, then Non-Furnished Auto is the best option for your dealership. It is best to work with your agent to determine which coverage options are best for the dealership.
Barbee Jackson Insurance is a nationally recognized independent insurance agency that helps a broad range of dealerships find the right insurance solutions. Our Dealership Specialists are among the top insurance agents in the industry. With clients throughout the United States and backed by the leading Garage Insurance carriers.