How Much Does Auto Dealer Insurance Cost? 2025 Rates

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 business insurance 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.

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

Business Owner’s Policy (BOP)

Auto dealerships often choose a Business Owner’s Policy because it combines commercial property insurance with general liability coverage in one package. This type of policy helps protect the dealership if someone is injured on-site and also covers damage to the building, showroom furnishings, office equipment, and service tools.

For example, if an electrical malfunction sparks a fire that damages diagnostic tools, display furniture, and interior structures, a BOP can help pay for repairs and replacements.

Average cost: about $142 per month

Typical liability limits: $1 million per occurrence and $2 million aggregate
Property limits depend on the value of your building, contents, and business assets.

Pricing varies based on:

• dealership size and inventory value
• business location and crime/weather exposure
• annual revenue
• number of employees and operational risk

Note: Estimates reflect typical annual BOP premiums for auto dealer operations based on market-average agency pricing; actual premiums will vary with inventory value, location, revenue, claims history, and coverage limits.

General Liability Insurance

General liability insurance protects auto dealerships from claims involving customer injuries or property damage that occur on the premises.

For example, if a visitor slips on a freshly cleaned showroom floor or trips near a parts counter, this policy can help cover medical expenses and legal defense costs.

Average cost: about $50 per month

Policy limits are commonly $1 million per occurrence and $2 million aggregate.

Rates are influenced by:

• dealership traffic levels
• location and facility layout
• add-on endorsements (like additional insureds)
• past claim activity

Tip: Dealers that allow customer test drives may also need Dealer Plate Insurance for added protection.

Note: Estimates reflect market-average annual general liability premiums tailored to auto dealer operations in each state; actual premiums will vary with inventory, services offered, claims history, location, and selected limits.

Workers’ Compensation Insurance

Workers’ compensation is required in most states for auto dealerships that employ staff. It covers medical expenses, wage replacement, and rehabilitation if an employee is injured while working.

For example, if a mechanic strains their back lifting a transmission or a salesperson slips on an icy lot, workers’ compensation helps pay treatment costs and lost wages.

Average cost: around $145 per month

Premiums are determined by:

• payroll size
• job classifications (sales vs. service technicians)
• workplace safety practices
• claims history

Dealerships may also choose Employment Practices Liability Insurance (EPLI) to cover claims involving discrimination, wrongful termination, or harassment.

Note: Estimates are approximate annual workers’ compensation premiums tailored to auto dealer operations in each state; actual premiums will vary with payroll, employee classification, claims history, and state-specific rules.

Garage Keepers Insurance

Garage keepers insurance protects customer vehicles while they are in the dealership’s possession for service, inspection, cleaning, or temporary storage.

If a break-in, fire, vandalism, or other event damages a customer’s car onsite, this coverage helps pay for repairs or replacement.

Average cost: about $40 per month

Policy limits often mirror $1 million per occurrence and $2 million aggregate.

Pricing varies based on:

• vehicle types handled (luxury, commercial, standard)
• dealership location
• level of security and storage setup

Optional enhancements include:

• Dealer’s Open Lot coverage for outdoor inventory
• Garage Liability for accidents arising from service operations

Note: Estimates are approximate annual garage keepers premiums for auto dealer operations based on typical market pricing; actual premiums will vary with inventory value, coverage limits, claims history, operations, and state regulations.

Commercial Auto Insurance

Commercial auto insurance applies to dealership-owned vehicles used for business purposes, including parts delivery vans, loaner cars, and shuttle vehicles.

If a staff member causes an accident while transporting a vehicle or accompanying a customer on a test drive, this coverage helps pay for repairs, injuries, and third-party damages.

Average cost: about $72 per month

Cost depends on:

• number of vehicles
• driving radius
• employee driving records
• vehicle value and type

Note: Estimates are approximate annual premiums based on market-average agency pricing for commercial auto coverage tailored to auto dealer operations; actual premiums will vary with fleet size, vehicle use, driving records, coverage limits, and other underwriting factors.

Auto Dealer Business Insurance Costs By Provider

Auto dealer business insurance costs will vary greatly depending on the insurance carrier. Use the table below to find average costs across different providers.

Note: Estimates are based on average annual premiums for auto dealer businesses; actual premiums will vary by location, inventory value, services offered, claims history, and coverage limits

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 Auto Dealer 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 for Your Dealership

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 at Your Dealership

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.