There are many facets of operating an auto dealership. The owner must order and maintain inventory, advertise his product, train and deploy a sales staff, and smoothly bring the customer through the purchase process. Although the main component of car dealer insurance is often the property liability coverage, much of the remaining risk in operating a dealership comes from the relations with the customers, particularly at the point of sale.
As any sales organization knows, the point of sale is the key point to generating revenue, which is the purpose of the business. From a sales view, this is the riskiest part of the relationship with the customer, and the most important. On the other hand, from a liability viewpoint, this is also a very risky time. At the end of the purchase transaction, the customer leaves with the car, and unless the purchase was made with cash, the dealer is left with a stack of promissory papers that yield payment at a future date. Most customers are honest and this drive-now-pay-later transaction works just fine. However, the cars at a dealership are very desirable and expensive, inspiring the larcenous hearts of a few. With these customers, the dealership is in danger of a fraudulent transaction, that at best could cost them hundreds in legal and recovery fees, and at worst, the value of the entire car. For this reason, good car dealer insuranceAuto dealership includes purchase protection such as Truth-In-Lending, false pretense, and customer identify liability protection.