Costs to enter the wholesale car business are low, as compared to new and used car dealerships. This is primarily due to the fact that wholesalers don’t have to invest in real estate and essentially only need a phone and auto hauler to transact business.  However, providing insurance coverage for wholesale auto dealers can be very complicated depending on the state.

Let’s first define a wholesale auto dealer versus an auto broker:

  • Wholesale Auto Dealers: independent operators who buy from dealerships and auctions and sell to other dealerships, either directly or through auctions. They do not sell to the public.
  • Auto Brokers: connect buyers with sellers without ever taking the title or possession of any vehicles.

The policies governing wholesale auto dealers varies significantly by state, with some states no longer allowing wholesalers to operate at all.  Some regulations require a physical location while others may issue licenses without a physical presence. 

Insurance carriers vary in their underwriting guidelines, but the below general questions are needed to begin quoting a wholesale auto dealer:

  • Address of the location where the vehicles are displayed/stored.
  • List of the auto auctions the applicant attends and their city/state location
  • The applicant must take possession and title of the vehicles to secure physical damage coverage on the automobiles.
  • List of owners/employees/drivers and the licensing state for each.  Owners possessing a driver’s license in another state must explain the discrepancy.
  • Vehicle transportation details.  Does the applicant do the pickup and delivery, or do they hire it out?
  • Details of dealer plate uses and procedures.
  • Does the dealership furnish employees autos for personal use?

MJ Kelly specializes in transportation insurance for our agency partners.  Our underwriters understand the unique intricacies of the auto dealer industry, including wholesale auto dealers.  We also provide a full range of coverage; including auto liability, dealers physical damage, garage keepers, UM/UIM, property and inland marine.