Car Dealers Insurance

Car dealers carry more insurance risk per square metre than almost any other retail business. A single forecourt can hold half a million dollars of vehicle stock exposed to theft, weather, fire and accidental damage. Add in test drive accidents, customer slip-and-fall incidents, and the growing threat of misrepresentation claims under consumer legislation — and the case for a properly structured motor trade insurance package becomes clear.

Vehicle Stock: Your Biggest Exposure

For most dealers, the vehicle stock is the single largest asset on the balance sheet — and it sits outside, often unfenced, 24 hours a day. Standard commercial property insurance does not cover motor vehicles on a dealer's premises. You need a dedicated vehicle stock policy that covers the full replacement value of your yard at any given time, including vehicles received on consignment and stock held at off-site storage locations.

Stock cover should be reviewed annually — or more frequently if your average stock value fluctuates seasonally. Underinsurance is a real risk: if your yard typically holds $800,000 of stock in summer but your policy only covers $500,000, you carry the difference in the event of a total loss.

Road Risk: Essential for Test Drives and Movements

Every time a prospective buyer takes a vehicle on a test drive, you're exposed to third-party liability on public roads. Road risk cover protects against damage to third parties and their property caused by vehicles being driven in connection with your business — whether by you, your staff, or an accompanied test driver.

Third-party-only road risk is the legal minimum. For dealerships with newer stock, comprehensive road risk (or combined stock and road risk) is more appropriate, as it also covers own-vehicle damage during test drives.

Customer Vehicles and the Service Department

If your dealership runs a service or pre-delivery inspection department, you take daily custody of customer vehicles. Customer vehicles cover (also known as bailee's liability) protects you when a vehicle in your care is damaged, stolen, or destroyed. A standard road risk or stock policy won't respond to damage to customer vehicles — you need this cover explicitly.

Professional Indemnity and Consumer Law

Consumer legislation gives vehicle buyers significant rights of recourse against dealers. A misrepresentation about a vehicle's history, odometer reading, or condition can trigger a claim well after the sale. Professional indemnity covers the legal costs of defending these claims and any settlement or award — without which a single dispute can cost tens of thousands of dollars in legal fees alone, regardless of outcome.

The Motor Vehicle Disputes Tribunal is specifically designed to adjudicate these disputes affordably for buyers — which means your exposure to claims is real and practical, not theoretical.

Bundling Your Cover

Most motor trade insurers offer package policies that combine stock, road risk, public liability, and property cover into a single premium and single policy document. For most dealerships, this is more cost-effective than placing covers individually, and it eliminates coverage gaps that can arise when multiple separate policies are held with different insurers.

Work with a specialist motor trade broker to ensure your package is structured around your actual operation — the number of vehicles, average stock value, whether you have a service department, how many staff drive vehicles, and what customer activities occur on site. Getting this right at placement avoids disputes at claim time.