Most dealers we sit down with in Oklahoma City are carrying a general liability policy and assuming the lot is handled. It is not. General liability covers a customer who trips in your showroom. It does not cover the customer's car sitting in your service bay, and it does not cover the sixty units parked outside when a hailstorm comes through Moore. Those are three separate coverages, plus a bond the state requires before it hands you a license. OKC Insurance Brokers is an independent brokerage that writes used car dealers in Oklahoma and Texas. This page explains each piece, what it costs to get wrong, and what we need to quote it.
Who we insure
Retail used car lots
Independent lots from fifteen units to several hundred, buy-here-pay-here included. The exposures are the same at any size, only the limits change.
Wholesale dealers
Dealer-to-dealer and auction operators. Lighter premises exposure, heavier drive-away and transit exposure, and the same $25,000 bond as retail.
Rebuilders, salvage and parts
Motor vehicle rebuilders, salvage pools, used parts and accessory dealers, each with its own Oklahoma license and bond amount.
Trailer and specialty dealers
Utility and semitrailer dealers, motorcycle and powersports lots, and dealers with a second lot location that needs its own bond.
Texas dealers
GDN license holders anywhere in Texas. The $85,000 garage liability minimum and the $50,000 Texas bond are covered on our Texas dealer page.
The three coverages every dealer needs
Each answers a different question: who got hurt, whose car was it, and who owns the inventory. If you only have one of these, you have a hole big enough to close the doors.
| Coverage | What it protects | Classic claim |
|---|---|---|
| Garage liability | Injury or property damage arising from your premises, your operations and the vehicles you own | A porter backs a trade-in into a customer's parked truck |
| Garagekeepers | Customer vehicles while they are in your care, custody and control | A customer's car is stolen off your service lot overnight |
| Open lot (dealers physical damage) | Your own inventory sitting on the lot. Can be bought as a standalone policy | Hail damages forty units in one afternoon |
What is garage liability insurance?
Garage liability is the liability policy written for a business whose operations revolve around vehicles. It bundles the premises and operations exposure of a general liability policy with auto liability for the vehicles you own and the units you move on dealer plates. A test drive, a porter run to the tag agency, a customer slipping on the showroom floor, a salesperson demonstrating a truck on the interstate: garage liability is the policy that responds. A standard commercial auto policy is not designed for a dealership's mix of owned inventory, customer vehicles and test drives, and a general liability policy alone leaves the vehicles out entirely.
Not a dealer? Repair shops, body shops, tow operators and detailers buy the same policy without the inventory; that version is on our garage liability insurance page.
Two things garage liability does not do: it does not cover damage to customer cars in your care (that is garagekeepers) and it does not cover your own inventory (that is open lot).
What is garagekeepers insurance?
The moment a customer hands you their keys, that vehicle is in your care, custody and control, and your liability policy excludes property in your care. That exclusion is not an oversight by the carrier. It is the entire reason garagekeepers exists as a separate coverage. Garagekeepers, sometimes spelled garage keepers, pays for damage to customer vehicles while you have them: in the service bay, on the lot waiting for parts, or being moved by your staff.
It comes in two forms, and the difference matters more than the price gap between them.
Legal liability form
Pays only if you are found legally responsible for the damage. Hail dents a customer's car on your lot while it waits for parts, you were not negligent, so a legal liability form may pay nothing. The customer is then arguing with you, not with a carrier.
Direct primary form
Pays for damage to the customer's vehicle regardless of fault, up to your limit. It costs more. In a state where hail is a routine annual event, most dealers we write choose direct primary once they see the difference on paper.
Run a repair shop, body shop, tire or lube shop, detailer or tow operation rather than a dealership? Read our garage keepers insurance guide or use the garage keepers quote form. It asks about the customer vehicles in your care and, if you need it, the building too.
What is garagekeepers legal liability?
It is the cheaper of the two garagekeepers forms above, and the one plenty of Oklahoma dealers are carrying while believing they have full protection for customer cars. Legal liability responds only when a court, or the carrier's adjuster, would find you negligent. Theft after you left the keys in an unlocked office qualifies. A hailstorm does not. Find the garagekeepers line on your own declarations page today and see which form you bought. If it says legal liability and you keep customer cars overnight between March and June, we should talk.
Open lot coverage and Oklahoma hail
Open lot coverage, written as dealers physical damage or DOL, insures the inventory you own. For an Oklahoma dealer this is usually the single largest exposure on the policy, because one storm can touch every unit at once. Three things to understand about how it is written:
- There is a per-vehicle limit and a per-location maximum. If your lot value has grown since you bought the policy, the per-location cap may no longer cover a total loss event.
- The hail deductible is often separate and often a percentage. This mirrors what has happened on the homeowners side across Oklahoma. A percentage deductible on a large lot value is a very different number from the flat deductible you may be picturing.
- Reported values drive the claim. Carriers usually require monthly or quarterly inventory reporting. Underreport to save premium and a large claim can be reduced proportionally.
You can buy open lot on its own. You do not have to move your whole program to get the lot covered properly. Dealers open lot can usually be written as a standalone policy: your garage liability and garagekeepers stay with the same carrier and the same agent, and the inventory gets covered alongside them. That is the fix when the per-location cap has not kept up, the hail deductible is a percentage you are not comfortable with, or the current carrier will not raise the inventory limit at all. Request a dealers open lot quote.
False pretense, and the coverages around the edges
A general liability policy protects against a customer who gets hurt. A dealership also loses money to people who never get hurt at all. These are the add-ons we quote most often, plainly described.
False pretense
Someone takes a unit off your lot with a bad check, a forged draft or a stolen identity on the credit app, and the car is gone. Theft coverage usually does not respond because you handed over the keys voluntarily. False pretense does.
Dealer errors and omissions
Title errors, odometer statements, undisclosed history and finance paperwork mistakes. A dealer E&O policy defends and pays the claims that come from the desk, not the lot.
Employment practices and workers comp
Once you have a sales floor and a detail crew, workers compensation is required in Oklahoma and an employment practices policy covers the wrongful termination and harassment claims that follow a firing.
Property and crime
The building, the sign, the shop equipment and the money in the drawer. Crime coverage picks up employee theft and forged checks that false pretense does not.
How much does dealer insurance cost?
We do not print a premium here, because a fifteen-car lot in Yukon and a two-hundred-car lot on I-240 are different risks and a single number would mislead one of them. What moves the price, in rough order:
- Lot value and unit count. The open lot limit and its hail deductible are the largest line on most Oklahoma dealer policies.
- Dealer plates and drivers. How many plates, who drives on them, and their records. Every plate is a car on the road under your policy.
- Location and hail history. The carrier knows the storm record for your address better than you do.
- Loss runs. Three to five years of claims history from your current carrier. Clean loss runs are the fastest way to a better rate.
- Limits and forms. Direct primary garagekeepers, a flat hail deductible and higher per-location caps all cost more and all pay when it matters.
Send your current declarations page and a recent inventory value and we quote from your real numbers, usually within a day or two. Having loss runs ready speeds it up considerably.
The $25,000 Oklahoma dealer bond
Insurance and bonding are two different things, and Oklahoma requires both from a licensed dealer. A surety bond is not insurance for you. It is a financial guarantee to the state and to your customers that you will operate within the law, and if a claim is paid on the bond, you repay the surety. Bond amounts are set by the Oklahoma Used Motor Vehicle, Dismantler and Manufactured Housing Commission by license type.
| Oklahoma license | Bond amount |
|---|---|
| Used motor vehicle dealer | $25,000 |
| Wholesale motor vehicle dealer | $25,000 |
| Additional lot location | $25,000 |
| Used motor vehicle dealer auctioneer | $50,000 |
| Motor vehicle rebuilder | $15,000 |
| Manufactured home dealer or manufacturer | $30,000 |
| City of Oklahoma City occupation bond (on top of the state bond) | $1,000 |
You pay a premium that is a small fraction of the bond amount, set mostly by credit, and the executed bond with its power of attorney arrives by email, usually the same day. Every one of these can be bought online on our Oklahoma used car dealer bond page, and the bond and the insurance can be written together so the license application goes in once.
Gaps that show up at claim time
These are the situations that generate the arguments, in rough order of how often we see them:
- Test drives. Whether a customer driving alone is covered, and under which coverage, depends on how the policy is written. Assume nothing.
- Drive-away and porter movement. Moving units between lots, to auction or to a detail shop can fall outside the premises definition.
- After-hours and unattended. Some forms carry conditions about lighting, fencing or securing keys. Theft claims are where those conditions get read closely.
- Loaner and courtesy vehicles. A unit lent to a service customer is often treated differently from inventory sitting on the lot.
- Employees using their own cars. If a salesperson runs a title to the tag agency in a personal vehicle, that is a different coverage question again.
Texas dealers
We write dealers on both sides of the Red River. Texas sets a minimum of $85,000 in garage liability for a GDN license holder and requires a $50,000 motor vehicle dealer bond. The garagekeepers and open lot questions above apply exactly the same way in Texas, and Texas hail is not gentler than Oklahoma hail. License categories, the TxDMV requirements and the Texas bond are on our Texas auto dealership insurance page.
What we need to quote your dealership
- Your current declarations page, or the license application if you are a new dealer.
- Lot address, license type and whether you sell inside Oklahoma City limits.
- Current inventory value and average unit count, plus the highest value you expect during the year.
- Number of dealer plates and a list of drivers.
- Three to five years of loss runs from your current carrier.
- Whether you keep customer vehicles overnight, offer loaners or run a service department.
With those six in hand we can usually tell you the same day which of the three coverages you carry, which garagekeepers form you are on, and what your hail deductible works out to in dollars on your current lot value. No charge, no obligation.
Dealer insurance questions we get asked
What is garage keepers insurance?
Garagekeepers insurance covers customer vehicles while they are in your care, custody and control: on your service lot, in a bay, on a test drive with your porter, or parked overnight waiting for parts. Your general liability policy excludes that property on purpose. Garagekeepers is written on either a legal liability form (pays only when you are at fault) or a direct primary form (pays regardless of fault). Check which one your policy carries.
What is garage liability insurance?
Garage liability is the liability policy built for businesses whose operations revolve around vehicles. It covers bodily injury and property damage arising from your premises, your operations and the vehicles you own, including test drives and dealer-plated units. It does not cover customer cars in your care (garagekeepers) or your own inventory (open lot). Those are separate coverages.
How much does used car dealer insurance cost?
It is priced on your lot value, the number of units and dealer plates, your drivers, the location and its hail history, your loss runs and the limits you choose. The hail deductible on the open lot is the number that moves the premium most in Oklahoma. We do not print a figure here because a fifteen-car lot in Yukon and a two-hundred-car lot on I-240 are different risks. Send your current declarations page and inventory value and we quote it from your real numbers.
How much is the Oklahoma dealer bond?
The Oklahoma used motor vehicle dealer bond is $25,000. The wholesale dealer bond is also $25,000, a dealer auctioneer bond is $50,000, a motor vehicle rebuilder bond is $15,000, and a dealer selling inside Oklahoma City limits also files a $1,000 city occupation bond. You pay a premium that is a small fraction of the bond amount, set mostly by credit, and the executed bond arrives by email, usually the same day.
Do I need the dealer bond and garage liability both?
Yes. They do different jobs. The bond is a guarantee to the state and your customers that you will operate within the law; if the surety pays a claim on it, you repay the surety. Garage liability is insurance that pays on your behalf when someone is hurt or their property is damaged by your operation. Oklahoma requires the bond for the license, and no lender, auction or floor plan company will work with an unlicensed or uninsured dealer.
Can I keep my current policy and just fix the lot coverage?
Usually. Dealers open lot, also called dealers physical damage or DOL, can be written as its own standalone policy. Your garage liability and garagekeepers stay where they are, and the inventory is covered separately with the limit and hail deductible you actually want. That is the common fix when the liability side is fine but the per-location cap has not kept up with what is on the lot. Request a dealers open lot quote.
Do you write dealers in Texas?
Yes. Texas requires a minimum of $85,000 in garage liability and a $50,000 dealer bond for a GDN license. The garagekeepers and open lot questions are the same on both sides of the Red River. Our Texas dealer page covers the license types and requirements.
Does my credit score change what the dealer bond costs?
Yes, more than anything else. A surety bond is credit, not insurance. With good credit an Oklahoma $25,000 dealer bond runs about 1 to 3 percent of the bond amount a year; with credit problems the rate climbs, and a few applicants are asked for collateral. Anyone quoting you 8 percent is charging you for their commission, not your risk.
Do I need $25,000 in the bank to get the dealer bond?
No. $25,000 is the penal sum, the most the surety would ever pay a claimant on your behalf. You pay an annual premium that is a small percentage of that amount, and the surety looks at your credit rather than your bank balance. Pay the premium, file the bond with the Used Motor Vehicle and Parts Commission, done.
What insurance covers test drives and cars driven on my dealer plates?
Garage liability. It covers the dealership when a customer, an employee or you are driving a vehicle held for sale, including test drives and trips on dealer tags. A personal auto policy will not cover it, and most of the agents who tell small dealers they are 'puzzled' by this simply do not write garage business. We do.
How is dealers open lot coverage priced?
On the value of the inventory you carry, your loss history, whether the lot is fenced and lit, and hail. Oklahoma hail is the reason carriers ask for the inventory value every month and why a hail deductible sits on the open lot section. A dealer carrying $250,000 in cars is priced very differently from one carrying $40,000, so we quote from your real inventory number.
Can I get an Oklahoma wholesale dealer license without a lot?
A wholesale license lets you sell only to other dealers, and Oklahoma still requires a licensed location, a dealer bond and garage liability. The insurance is lighter because there is no retail traffic and no customer test drives, but the bond is the same. Tell us wholesale versus retail when you ask for a quote; the market and the price both change.
Related: the Oklahoma used car dealer bond to file with your license, commercial auto insurance for tow trucks and service vehicles, dealer errors and omissions for the paperwork side, every Oklahoma surety bond we write, and our Texas dealer page.