Question 1

What insurance does an auto dealer need in Tennessee?

Accepted Answer

Auto dealers in Tennessee need several specialized coverages. Dealer open lot coverage protects your vehicle inventory against fire, theft, weather, and vandalism. Garage liability covers bodily injury and property damage claims arising from your dealership operations. Garage keepers liability protects customer vehicles left in your care for service or repair. Commercial auto covers dealer-plated vehicles and test drives. Workers compensation is required for most Tennessee dealerships with employees. Many dealers also carry dealers errors and omissions insurance and surety bonds required for their Tennessee dealer license.

Question 2

What is garage keepers liability insurance and do I need it in Tennessee?

Accepted Answer

Garage keepers liability insurance covers damage to customer vehicles that are in your care, custody, or control for service, repair, storage, or parking. If a customer's vehicle is damaged by fire, theft, vandalism, or an employee accident while at your shop, garage keepers liability pays for the damage. Any Tennessee repair shop, service garage, body shop, or dealership service department that works on customer vehicles needs garage keepers liability coverage. Without it you are personally liable for damage to every customer vehicle on your lot.

Question 3

What is dealer open lot insurance in Tennessee?

Accepted Answer

Dealer open lot insurance covers your vehicle inventory against physical damage from fire, theft, vandalism, hail, flooding, and other covered perils. For Tennessee auto dealers your inventory is your most valuable asset and it sits exposed on your lot every day. Dealer open lot coverage is typically sold on a per-vehicle or blanket basis and should be reviewed regularly to make sure your coverage limit matches your current inventory value. Knoxville Insurance Store works with carriers that specialize in Tennessee auto dealer coverage.

Question 4

What is the difference between garage liability and general liability for auto dealers?

Accepted Answer

General liability insurance covers basic slip and fall and property damage claims at most businesses. Garage liability is a specialized form of liability insurance designed specifically for auto dealers and repair shops that adds coverage for operations involving vehicles — including test drives, vehicle movement on your lot, and work performed on customer vehicles. Tennessee auto dealers need garage liability rather than standard general liability because general liability policies typically exclude automobile-related operations.

Question 5

Do used car dealers need different insurance than new car dealers in Tennessee?

Accepted Answer

The core coverages are similar but used car dealers and new car dealers have different risk profiles that affect how carriers rate and price their policies. Used car dealers typically have higher theft exposure and more varied inventory values. New car dealers often have franchise agreements that require specific coverage limits. Independent used car dealers in Tennessee may find fewer carriers willing to write their coverage, which is why working with an independent agency like Knoxville Insurance Store that has access to specialty markets matters.

Question 6

Does a Tennessee auto dealer need a surety bond?

Accepted Answer

Yes. Tennessee requires auto dealers to obtain a surety bond as part of the dealer licensing process. The bond amount required depends on the type of dealer license. A surety bond protects consumers and the state against dealer fraud or failure to transfer titles properly. Knoxville Insurance Store issues dealer surety bonds quickly so you can meet your Tennessee dealer license requirements without delay.

Question 7

What insurance does an independent auto repair shop need in Tennessee?

Accepted Answer

An independent auto repair shop in Tennessee needs garage liability insurance, garage keepers liability for customer vehicles in your care, workers compensation if you have employees, commercial auto for any shop vehicles, and property insurance for your building, equipment, and tools. Some shops also carry pollution liability for fuel and fluid storage. Knoxville Insurance Store packages all these coverages for Tennessee repair shops and works with carriers that understand the specific risks of independent garage operations.

Question 8

Are test drives covered under dealer insurance in Tennessee?

Accepted Answer

Yes — test drives by prospective buyers are typically covered under a properly structured garage liability and dealer open lot policy. However coverage specifics vary by carrier and policy so it is important to confirm your policy explicitly covers unaccompanied test drives, dealer-plated vehicles, and any driver operating a vehicle with your permission. Knoxville Insurance Store reviews your dealer policy to make sure test drive exposures are properly covered.

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