What Happens to Reinsurance When You Sell Your Dealership?
The dealership and reinsurance company may represent two different assets with different economics, liabilities and timelines. Understand both before signing the buy-sell agreement.
Selling the dealership does not necessarily mean the dealer's existing reinsurance economics disappear.
This is an important distinction during a buy-sell transaction.
Existing Business Does Not Vanish
The reinsurance company may still contain:
Existing contracts may continue developing for years after the dealership itself has been sold.
New Business Usually Changes
Once the dealership is sold, the former owner generally no longer controls the store's future F&I production.
Therefore, new contracts sold by the dealership after closing will generally flow according to the buyer's arrangements—not automatically into the seller's existing reinsurance structure.
Treat Reinsurance Separately During the Transaction
A dealer selling a rooftop should understand:
- Is reinsurance included in the transaction?
- Excluded?
- Who owns the entity?
- Who controls the assets?
- What happens to existing liabilities?
- Can the seller continue owning the company?
- Are there runoff provisions?
- Are there change-of-control issues?
- What do the governing documents say?
The Bottom Line
Do not allow the reinsurance company to become an afterthought during a dealership sale.
When was the last time someone independently reviewed your reinsurance program?
Confidential. No obligation. There is no charge for the initial assessment. You may discover an opportunity, a problem, or that your program is exactly where it should be. But you’ll know.