Why Every Dealership Needs an Umbrella Policy

At DealeRisk, we often say that running a dealership means managing risk in multiple directions: on the lot, in the service department, and on the road. You protect your employees, your customers, and your business from hazards that can show up unexpectedly, sometimes long after the sale or service is complete.

One of the most important, and most overlooked, tools for protecting the future of your dealership is an umbrella or excess liability policy. If you’ve ever wondered whether your business really needs one, the short answer is simple:

Yes. You do. Absolutely.

Here’s why.

Dealership Operations Carry Significant “Worst-Case Scenario” Risk

Dealerships are busy, high-traffic environments. Employees interact with customers daily, vehicles are constantly moving on the lot, service bays are active with lifts, tools, and machinery, and test drives put cars on the road in unpredictable conditions. Even well-run dealerships can face incidents with massive financial consequences.

A serious injury in a showroom, a service accident, a customer vehicle damaged during delivery, or a slip-and-fall on your lot can trigger claims well above the limits of your general liability, auto liability, or workers’ comp policies.

Umbrella coverage is what catches you when the unexpected happens.

Your Primary Policies Only Take You So Far

Most dealerships carry standard liability limits:

• $1 million General Liability

• $1 million Auto Liability

• $1 million Employer’s Liability

When things go wrong, these limits can disappear quickly. Legal fees, medical costs, settlements, and jury awards continue to climb.

Umbrella policies step in after your primary policy limits are exhausted, giving you an extra $1 million, $2 million, $5 million, or more in protection. Without it, the gap becomes your responsibility.

A Single Claim Can Threaten the Entire Business

Many owners assume catastrophic claims happen to “other dealerships.” But year after year, we see dealerships, well-run operations, facing:

• Seven-figure bodily injury or property damage claims

• Test drive or service-related accidents

• Employee injuries or slip-and-fall incidents

• Long-running lawsuits that threaten cash flow and reputation

Without umbrella coverage, these situations can:

• Drain cash reserves

• Force asset liquidation

• Impact your dealership’s reputation

• Put contracts or vendor relationships at risk

• Even shut down the business entirely

Your dealership has worked hard to build a strong foundation. Umbrella coverage exists to keep it standing no matter what comes your way.

It’s the Most Cost-Effective Liability Protection You Can Buy

Umbrella coverage is usually far more affordable than you think, especially compared to the protection it provides.

Think of it as the seatbelt-and-airbag combination for your dealership: you hope you never need it, but if you do, it’s the only thing that prevents a financial disaster.

Umbrella Coverage Protects the Business You’ve Built

You invest in employees, inventory, facilities, and customer relationships, because they matter. Umbrella coverage is simply an extension of that philosophy.

It protects:

• Your employees

• Your customers

• Your physical assets

• Your reputation

• Your future

At DealeRisk, we view umbrella insurance as foundational, not optional. It’s one of the strongest tools you have for controlling risk and securing long-term stability for your dealership. You can’t control every customer interaction. You can’t control every service or test drive accident. You can’t control every driver on the road.

But you can control how well your dealership is protected when the unexpected happens.

An umbrella policy gives you the peace of mind that one bad day won’t define your business’s future. It keeps your focus where it should be: building a safer, stronger, more profitable dealership. 

If you’re unsure about the insurance protection that you have for your dealership, reach out to a DealeRisk team member today for a FREE Insurance Coverage Review.