How Much Does Auto Dealer Insurance Cost? 2025 Rates

In 2025, U.S. auto dealers can expect to pay $600 annually for business insurance, averaging $50 per month. The primary cost drivers are location, the type of dealership, coverage limits, services offered, number of employees, business size and revenue, use of vehicles, and value of inventory & equipment.

How Much Does Auto Dealer Business Insurance Cost?

The average auto dealer in the U.S. pays $600 per year for a business insurance package. That breaks down to roughly $50 per month. However, this is just a ballpark range and actual costs can vary widely depending on your specific situation.

Every auto dealership has its own unique risks, so there’s no one-size-fits-all price for insurance. A small used car lot with no repair services and just one or two employees will pay much less than a large dealership with a full service center, a large inventory, and a team of salespeople and mechanics.

Things like the types of vehicles you sell, whether you offer repairs or test drives, the value of your property and inventory, and your location all affect how much you pay for insurance.

For example, a dealership located in an area with high crime or a history of lawsuits may pay more for liability coverage. Likewise, a dealer with a service garage and expensive tools may have higher property insurance costs than a simple sales lot with just a few vehicles and no on-site repairs.

Here are some of the biggest cost drivers:

• Number of employees (affects workers’ comp and liability)
• Property size and value (affects commercial property coverage)
• Past claims history (insurers charge more if you’ve filed claims)
• Services offered (affects overall risk exposure)
• Test drives and dealer plates (affects garage liability and auto coverage)
• Inventory type and value (affects garagekeepers and property insurance)
• Business interruption coverage and other add-ons

Understanding these variables can help you better estimate your insurance needs and prepare for the real costs of protecting your auto dealer business.

Average Auto Dealer Insurance Costs For Coverage Types

When it comes to protecting your auto dealer business, different types of insurance cover different risks. Understanding the average cost, coverage details, and what influences pricing for each policy type can help you build a more effective insurance plan.

Here’s a closer look at the major coverages most auto dealer businesses need.

• General liability insurance: $50 per month
• Business owner’s policy: $142 per month
• Garage keepers insurance: $40 per month
• Workers’ compensation insurance: $145 per month
• Commercial auto insurance: $72 per month

General Liability Insurance

The average cost of general liability insurance for an auto dealer business is about $50 per month.

General liability covers third-party bodily injury, property damage, and advertising injuries. For instance, if a customer slips and falls on a wet showroom floor or trips over a loose floor mat in your service area, this policy can help cover their medical expenses as well as any legal defense costs if you’re sued.

Typical policy limits are $1 million per occurrence and $2 million aggregate.

Factors that influence the cost include the business size, location, customer traffic volume, previous claims history, and any endorsements you may add, such as an additional insured.

Business Owner’s Policy (BOP)

The average cost of a business owner’s policy (BOP) is about $142 per month for an auto dealer business.

A BOP bundles general liability insurance with commercial property insurance. It protects against customer injuries, property damage, and loss or damage to the auto dealer’s building, and furnishings.

For example, if an electrical fire breaks out in your service bay and damages diagnostic equipment, vehicle lifts, and part of the building structure, a BOP would help pay for the necessary repairs and equipment replacements.

Typical policy limits are $1 million per occurrence and $2 million aggregate for liability, with separate property coverage limits based on the value insured.

Cost factors include the value of your property and inventory, the location of your dealership, your annual business revenue, and the number of employees you have on staff.

Garage Keepers Insurance

The average cost of garage keepers insurance for an auto dealer is $40 per month.

Garage keepers insurance protects your customers’ vehicles while they’re on your lot or in your service area. This means if a customer leaves their car with you for repairs, maintenance, or detailing, and something happens to it, like theft, fire, or vandalism, this insurance helps cover the cost to fix or replace it.

For example, if someone breaks into your service garage and damages a customer’s car, garage keepers insurance would help pay for the repairs and any legal costs if the customer takes legal action.

Typical policy limits are $1 million per occurrence and $2 million aggregate.

The price of garage keepers insurance can vary based on a few things. It depends on what kind of auto business you run, where your dealership or shop is located, and the types of vehicles you work with, like standard cars, luxury vehicles, or trucks.

Workers’ Compensation Insurance

The average cost of workers’ compensation insurance for an auto dealer business is around $145 per month.

Workers’ comp covers medical bills, rehabilitation, and lost wages for employees injured on the job. For example, if a technician injures their back while lifting a heavy engine part in the service bay, workers’ comp would help pay for their hospital visit, physical therapy, and a portion of their wages while they recover and are unable to work.

Policy limits are regulated by each state, but typically include medical costs and a percentage of lost wages without a set cap.

Premiums are influenced by the size of your payroll, the type of work employees perform, your claims history, and any implemented safety programs.

Commercial Auto Insurance

The average cost of commercial auto insurance for auto dealers is about $72 per month.

Commercial auto insurance covers vehicles owned or used by the business for accidents, theft, vandalism, or damage. For example, if one of your employees is test-driving a vehicle with a customer and causes an accident, commercial auto insurance would help cover the repair costs, medical expenses, and any third-party liability claims.

Factors influencing the cost includes how many vehicles your business owns and what kind they are, like service vans, parts delivery trucks, or customer shuttle vehicles. It also matters how often you use them and what they’re used for.

Your employees’ driving records are important too. If they have clean driving histories, your insurance will likely cost less. Costs can also change depending on whether you use vehicles for local test drives, long trips to trade vehicles with other dealers, or to deliver parts.

What Factors Impact Your Auto Dealer Insurance Costs?

Insurance companies look at your dealership’s risk level when deciding how much you’ll pay for coverage. This process is done by underwriters who study different parts of your business.

Here’s a list of factors that impact your auto dealer insurance costs:

Location Of Your Dealership

The location of your dealership can affect insurance costs. If your business is in a high-crime area or in a place prone to natural disasters (like floods or hurricanes), your premium may be higher. This is because the risk of theft or property damage is greater.

Size And Type Of Your Business

Larger dealerships or those that handle more vehicles (like a used car lot or a service center) generally pay more for insurance because there’s more risk involved. A small dealership with fewer vehicles will likely pay less than a larger one with more inventory.

Claims History

If your dealership has had a lot of past insurance claims (for things like accidents or property damage), your premiums might go up. Insurance companies see businesses with a history of claims as riskier to insure and charge more to cover that risk.

Types Of Vehicles You Sell Or Service

The kind of cars your dealership deals with also plays a role. For example, luxury cars or high-performance vehicles cost more to repair or replace, so the insurance premiums may be higher. If you sell or service specialty vehicles like trucks or exotic cars, your insurance might be more expensive.

Number Of Employees

The more employees you have, the higher the chance of accidents or injuries on the job. A dealership with many workers, especially in repair or service areas, may face higher insurance costs to cover potential workplace injuries.

Security Measures

Dealerships with strong security systems (like alarms, surveillance cameras, or secure fences) are seen as less risky by insurance companies. If your business has good security in place to prevent theft or damage, your insurance premium may be lower.

How To Lower Your Auto Dealer Insurance Costs

Running an auto dealer business is expensive, but your insurance bill doesn’t have to break the bank. While you can’t eliminate the need for coverage, you can take smart steps to reduce your premiums without sacrificing protection.

Here are some practical ways to lower your auto dealer insurance costs:

1. Bundle Your Policies

One of the easiest ways to save is by bundling multiple policies. Most insurers offer a Business Owner’s Policy (BOP) that combines general liability and property insurance at a lower rate than if you bought them separately.

If you also need workers’ compensation, bundling both through the same provider can lead to additional discounts. Not only does this simplify your paperwork, but it also makes your coverage more cost-efficient.

2. Ask About Discounts

Insurance companies often reward auto dealer businesses that commit to a policy long-term. Ask your provider if they offer multi-year discounts for signing a two- or three-year agreement instead of renewing annually. You might also qualify for lower rates if you pay your premium in full instead of in monthly installments.

3. Implement Safety Measures

Accidents can be costly for both your dealership and your insurance provider. Taking proactive steps to prevent injuries to customers or employees can help lower your insurance premiums over time.

For example, keeping your showroom and service areas clean and well-maintained, using proper signage for wet or slippery floors, and ensuring walkways are free of clutter can reduce the chance of accidents.

Additionally, regularly inspecting and maintaining equipment like lifts, tools, and vehicles can prevent accidents in the service bays.

4. Create A Safe Working Environment

Having a strong safety program in place can help reduce your workers’ compensation costs. This includes training your employees on proper lifting techniques, safe handling of tools and equipment, fire safety procedures, and ensuring clear emergency exits in all areas, including the service bay and showroom.

5. Adjust Your Deductible

Your deductible is the amount you pay out of pocket before insurance coverage kicks in. Choosing a higher deductible can significantly reduce your monthly premiums. Just make sure you can comfortably cover that amount if a claim arises.

By taking these steps, you not only save money but also make your auto dealer business a safer, and more resilient business.