Auto Dealers Workers’ Compensation

Companies with employees are often mandated by their state’s laws to carry Workers’ Compensation coverage. Auto dealerships without this required coverage could potentially have their license suspended or have other disciplinary action taken against the dealership.

What is Workers’ Comp?

Workers’ Comp is a form of insurance that covers medical costs, lost wages, vocational rehabilitation, and more, as a result of a work-related injury or illness.

The coverage is called Workers’ Compensation, but is actually broken into two parts: Workers’ Compensation is Part A and Employer’s Liability is Part B. Part A compensates the employee for injury or illness that occurs while on the job. Part B protects the employer in the event an employee feels the employer was negligent, causing an injury/illness, and decides to sue them.

Car dealers with a Workers’ Comp policy have reassurance that if an employee gets ill or hurt due to work, they will be able to get the medical care they need and return to work healthy. It also prevents most civil litigation from being pursued against the dealership.

Employees can go to work knowing that, should a major injury or illness occur while on the job, their medical costs will be covered. In more serious cases, workers’ comp also pays benefits to worker’s families if they are killed during a work-related accident or from a work-related illness.

Scenario: Consequential Bodily Injury - an employee’s spouse files a lawsuit against the spouse’s employer for injuries incurred as a result of the employee's injury. For example, the employee’s spouse finds out the employee was injured while on the job and the spouse then suffers a heart attack.


Workers’ Comp (Part A) has no set limits. The Workers’ Compensation Board in each state determines the amount to be paid out to the injured or ill employee. The Board looks at the employee’s weekly salary and severity of the injury/illness to decide on the amount of benefits the employee will receive.

Employer’s Liability (Part B), unlike Part A, has set limits. The standard limits are $100,000 per occurrence, $100,000 per employee, and $500,000 policy limit. These apply to all states except the following: North Dakota, Ohio, Washington, and Wyoming. The four listed are monopolistic states, meaning employers are required to purchase the coverage from the state’s workers’ compensation fund. These do not include Employer’s Liability, so stopgap coverage is required to cover this portion which is offered as an endorsement to either the Workers’ Comp or General Liability policy.


Policies range in cost from 1% to 6% of the total payroll. It also varies based on location, the company’s work-related injury history, etc. Rates are higher in California and lower in Texas, with most other states falling somewhere in the middle.

State Range
State Rate
State: CA Rate: 3-6%
State: AZ, FL, GA, NY Rate: 2-3%
State: TX Rate: 1-2%

What doesn’t Workers’ Compensation cover?

An employee’s medical costs or lost wages due to an injury/illness that occurred while off the job would not be covered under Workers’ Comp.

Many are under the impression that general liability or garage liability insurance will cover employee injuries, but that is not the case. General or garage liability protects against third-party (customer) injuries.

Partnership with ADP

Jet and ADP have partnered together to provide workers’ compensation insurance and payroll services to auto dealers at low prices with great coverage. It is an asset to have payroll services and workers’ comp handled by the same insurance provider since workers’ comp rates are directly related to employee payroll.

Partnership with ADP
Traditional Comp Carriers Jet/ADP Program
Traditional: Premium based on estimated annual payroll Jet/ADP Program: Premium based on actual payroll
Traditional: High risk of additional premium due Jet/ADP Program: Less risk of under or overpayment
Traditional: 25-100% deposit required Jet/ADP Program: No deposit required*
Traditional: Mailing checks with risk of late payment Jet/ADP Program: No writing checks