Why are Motor Vehicle Dealerships experiencing higher insurance rates?
The United States has a booming economy circling Motor Vehicles and sales. Businesses are required to maintain bonding and insurance to keep their businesses compliant per state regulation.
In recent years, due to the increase of commercial profits and value of the industry, insurance rates have sky-rocketed. But that’s not the only reason these businesses are having to pay more.
There is no doubt that the sale of vehicles is a profitable and lucrative business venture to embark upon. As a result, some customers experience negligent or fraudulent services from their Dealerships. As more dealerships open, the risk of claims increases as well. The customer makes a claim and the insurance companies pays out to their detriment.
Insurance companies have to provide funds for the legal services to fight the insurgence of claims in court, too. Conceivably, legal expenses may amount to the full amount of a claim, especially if the case resolves in a settlement. Read more about the rising legal costs and types of liability coverage at AutoDealerMonthly.com.
Insurers have increasingly been losing money to claims made on Dealership insurance, and insurers have to make up that profit somehow. To make up for the escalation of claims, insurance companies are forced to raise their rates for even the most responsible dealers. The insurance claim money must be replenished at the sake of the new business owner. Consequently, those entering the business as dealers are looking at higher rates than seen before.
Having higher rates also provides incentive for the business to transact lawfully and ethically. This is where Surety Bonds come into play, which are also mandated in order to receive a Motor Vehicle Dealer License. Surety Bond rates can differ because they protect the customer rather than the business owner. Bond rates have risen slightly, yet are more manageable than those of liability insurance for dealerships. Surety1 is well-versed in providing amazing rates (as low as 1 percent) for the whole year. To end the vicious cycle of high rates, call Surety1 at 877-654-2327. Or apply for your surety bond online today.