For the past few days, it’s been raining cats and dogs in New Jersey. Being stuck inside, I was scrolling through my social media feed and came across a video of multiple new cars being washed down what appeared to be a river from a car dealership. This led to a lively discussion on my reposting of the video as to whether the insurance company would pay for the loss of vehicles, which of course got me thinking, would this be a covered loss? What types of policies do car dealerships typically have?
Researching various broker sites, a comprehensive auto dealer policy typically includes coverage for property damage and bodily injury; garage keepers coverage (for damage to autos and property left by customers); garage-owned autos; owned autos (provides protection for claims arising out of ownership and disagreements); hired autos (protects vehicles owner or employees rent or borrow for business purposes); non-owned autos (covers partners, employees or members of household using vehicles for either business or personal); temporary substitute autos; or newly acquired autos. This policy does not cover for flood damage.
As both business owners and home owners should know, a general insurance policy does not cover flood damage. To protect against storm surge, flash flooding, mudslides, and ice jams, a commercial flood insurance policy is necessary. The commercial flood policies can insure for contents- covers inventory, merchandise, machinery and any other contents up to $500,000 or commercial building, which covers building and contents up to $500,000.
Looking at the number of cars washing down that river, the next question I asked myself was whether the inventory would be assessed at resale value or dealer cost? $500,000 coverage doesn’t seem like a lot when there are that many vehicles. Anyone involved in the purchase of a vehicle knows there is a certain amount of upcharge so negotiations can take place, if the vehicles are assessed at cost, how does the dealer recognize lost profit? Generally, a policy for Business Interruption Coverage is intended to compensate for losses that occur as a consequence of having to close a business after commercial property is damaged by a covered loss. Flood is not a covered loss under these policies.
It’s always smart to ask your agent or broker when purchasing a policy exactly what perils are covered against and make sure you have enough insurance to cover the business if a loss is suffered. If you feel there is not enough coverage, don’t be afraid to inquire about excess coverage or additional types of coverage.