Brace yourself: The dealership insurance market just got smaller, again

This article by Zach Materne appeared in the July issue of Powersports Business. Materne is a commercial property and casualty risk consultant for Apiar Commercial Risk Management/Cell Brokerage Risk Management Group. LA Resident License #871096 | Cell Brokerage CA LIC. #0G83985 | NPN #14775635

If you’ve felt like insurance has become harder to manage lately, you’re not imagining things. The powersports insurance market is tightening — and fast.

If it feels like I say this every time, it’s because I do. Things keep tightening, and unfortunately, this isn’t just a temporary phase. The good news is that dealers who stay ahead of these challenges by being prepared still have options. But waiting until renewal — or worse, until something goes wrong — isn’t a winning strategy.

Another major market — one that has historically insured Harley-Davidson dealerships exclusively — will begin non-renewing those accounts starting July 1, 2025. This comes on the heels of their 2023 exit from the broader powersports space. With this shift, one of the last remaining dedicated options for Harley-Davidson dealers is closing its doors.

Even more concerning: No new markets are stepping in to replace them. The remaining garage carriers are overwhelmed with submissions and becoming far more selective. If you’re a smaller dealership, deal in ATVs, side-by-sides, or have watercraft exposure, you’re likely already feeling it.

That’s why it’s never been more important to work with a broker who understands the operations of a powersports dealership — and has relationships with the underwriters making these decisions. In this environment, you need someone who can advocate for you, explain your business, and make sure your submission gets a fair look.

A big part of the disconnect is that most garage insurance programs were built around automotive dealerships — businesses with less risky driving exposure, fewer customer interactions, and minimal off-site activity. That model doesn’t reflect how we operate in powersports.

We build community through demo rides, events, group rides, and brand engagement well beyond the showroom. That’s good business — but it also brings added exposure that many underwriters don’t want to take on without serious controls in place.
Let’s start with test rides, which are under heavy scrutiny. If you haven’t reviewed your procedures lately, now is the time.

Underwriters are looking for:

• Signed demo waivers
• Proof of customer insurance
• Full riding gear
• An understanding of the customer’s riding ability
• A designated route that avoids high-risk elements like left turns
• And most importantly: test rides led by a dealership employee

These are no longer just recommendations. Failing to meet these standards can result in denied coverage and claims — or worse, mid-term cancellation if uncovered during a policy audit. If your process isn’t documented, consistent, and followed, you’re putting your coverage at risk.

Now let’s talk about events. Bike nights, poker runs, off-site shows and customer appreciation days are essential to what we do — but increasingly, policies are excluding coverage for any activity outside of “normal business operations.”

That may even include on-site events unless they’re approved in advance or covered under a separate policy.

This isn’t about being reckless. It’s about operating in a system that wasn’t built for how we sell. Powersports dealers face real exposure, and we need to actively manage that risk — not assume we’re covered.

So what can dealers do?

First, treat insurance like an operational priority. Start your renewal process no less than 90 days out. But more importantly, communicate any operational changes with your broker. Adding a new brand, hosting a new event, adjusting staffing — all of it matters from a risk standpoint.

Second, document and audit your internal procedures, especially those involving riding or driving any vehicle — whether it’s a customer unit, inventory, or something owned by the dealership. Make sure your policies cover how mechanics or staff operate vehicles, how test rides are supervised, and how events are managed. These documents should be active, not just filed away.

Third, work with a broker who understands the operational requirements of doing business as a powersports dealership. Someone who has lived in your world — not just read the policy. Someone who knows why your service team rides customer units, why your team is out at events, and how your sales strategy depends on experiences, not just inventory. A broker who gets your operations is a broker who can properly advocate for your risk profile.

I’ve lived both sides of this. As a former dealer, I know the frustration of feeling misunderstood. As a consultant, I see how much better things go when a dealer is prepared and represented well.

This is a hard market. This latest exit won’t be the last. But the dealers who treat insurance as a strategic tool — not just a line item — are still finding ways to stay protected and competitive.

The market isn’t getting easier. But if you plan ahead, stay disciplined, and have the right partner in your corner, you can keep your doors open—and your momentum going.