Florida Dealership Insurance

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Whether you are a new operation or an existing Florida Dealership you are going to need insurance. What coverage options and amount will depend on what you are planning to sell. Florida law states that any person or corporation that sells, offers to sell, or deals in three (3) or more vehicles sales in any 12-month time period must be licensed in the State of Florida and have the appropriate insurance. How much insurance depends on your dealership type.

Auto Dealership Sales | New & Used

Florida Auto Dealership Insurance Requirements for Motor Vehicle Sales

  • $25,000 Surety Bond a.k.a. Dealers Bond
  • At minimum a $25,000 combined single limits liability (CSL) Garage Liability insurance policy that includes bodily injury and property damage
  • $10,000 personal injury protection (PIP)

Mobile Home Dealers | New & Used

Florida Dealership Insurance Requirements for Mobile Home Sales

  • $25,000 Surety Bond a.k.a. Dealers Bond
  • At minimum a $25,000 combined single limits liability (CSL) Garage Liability insurance policy that includes bodily injury and property damage
  • $10,000 personal injury protection (PIP)

Recreational Vehicle Dealers | New & Used

Florida Dealership Insurance Requirements for Recreational Vehicles Sales

  • $10,000 Surety Bond a.k.a. Dealer Bond
  • At minimum a $25,000 combined single limits liability (CSL) Garage Liability insurance policy that includes bodily injury and property damage
  • $10,000 personal injury protection (PIP)

Knowing what the required amount of insurance is to satisfy the State of Florida is one thing, buying enough insurance to protect you and your dealership is another. The state requires only $25,000 of liability insurance, but in most cases that will not be enough to cover a potential loss. If you or another individual (for example someone test driving) hits another vehicle, building, or person; $25,000 may not be enough to cover the repairs and/or injuries. This means that you would be held liable to compensate the other person in the accident after the $25,000 is exhausted. That’s why we recommend all dealership to purchase $1,00,000 of liability insurance to cover potential losses. Lower coverage options are available, but not recommended.

Additional Coverage Options

  • Dealer Open Lot Insurance/Physical Damage Coverage
  • Scheduled Commercial Auto
  • Diminished Value Coverage
  • Errors & Omissions
  • False Pretense Coverage
  • Garagekeepers Insurance
  • Workers Compensation
  • Business Interruption
  • Damage to Rented Premises
  • Furnished Auto 
  • Property 
  • Business Personal Property 

Dealer Open Lot Coinsurance Clause [DID vs. SHOULD]

Many Florida Dealerships after a loss become aware of an insurance clause known as Coinsurance. This comes as a surprise to most dealerships because their agent didn’t inform them on how coinsurance works. Why? The majority of the time the agent does not know exactly how the coinsurance clause works. Let’s take the guess work out of coinsurance by explaining exactly how coinsurance affects you after a loss.

Acme Dealership is a mid-size dealership based in Florida with an average inventory level of $750,000. They purchased Dealer Open Lot coverage to protect their inventory against potential loss and it contained a 100% coinsurance clause (standard for most dealership insurance) and a $5,000 maximum lot deductible. What the agent didn’t know and what the dealership failed to provide the agent was a sudden increase in inventory that jumped to $1 Million. At the same time, a major hurricane struck Florida and the dealership sustained a major loss of several vehicles costing the dealership $300,000 in total inventory loss. This is how the claim and the coinsurance would play out.

[DID versus SHOULD]

The Dealership purchased Dealer Open Lot Coverage [DID] – $750,000
The Actual Inventory at time of loss was [SHOULD] – $1,000,000

Coinsurance Clause
$750,000[DID] / $1,000,000[SHOULD] = .75
Total Inventory Loss – $300,000
Lot Deductible – $5,000
Coinsurance Calculation (.75 x 300,000) – $5,000 = $220,000 payout for loss of vehicle inventory

Acme Dealership sustained a $300,000 loss, but will only receive a loss settlement from the insurance company of $220,000 due to the coinsurance clause. Acme Dealership thought they only had a $5,000 maximum lot deductible, but in reality with the coinsurance penalty and the lot deductible they are out-of-pocket $80,000. That is why it is always a good practice to check the vehicle inventory levels monthly to make sure they are at the limit provided by the Dealer Open Lot. If Acme Dealership and the agent would have increased the Dealer Open Lot coverage to $1,000,000 the loss payout would have been $295,000 because there would be no coinsurance penalty saving the dealership $75,000.

***Florida Dealerships be AWARE***

Many Florida dealership insurance policies exclude wind, hail, and flood from the policy coverage. In Florida, our biggest potential loss factor is wind and flood due to the tropical storms and hurricanes. It is important to double check with you agent to make sure you are properly covered for this type of loss.

Barbee Jackson Insurance – Your  Insurance Experts

Barbee Jackson Insurance Agency is a leading provider of  Dealership Insurance and we work with the largest dealership insurance carriers to provide our clients the best coverage options for the best price. Our professional staff is always here to help…even if you insure with our competitors. Call today if you need any help understanding coverage options or if you are looking for a competitive quote 850-389-2001.

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