Colorado Car Sales Practice Test

Which of the following is NOT true regarding vehicle dealerships?

1. Dealers must be self-insured or have insurance for vehicles.

2. Dealers can operate with a lapsed insurance policy.

3. Dealers are responsible for their vehicle inventory insurance.

4. Insurance is mandatory for the vehicle sales business.

The correct answer is: Dealers can operate with a lapsed insurance policy.

The statement that is not true regarding vehicle dealerships is that dealers can operate with a lapsed insurance policy. Vehicle dealerships must maintain active insurance coverage to protect their assets and ensure compliance with legal and regulatory requirements. Operating without valid insurance exposes the dealership to significant financial risks, liabilities, and potential legal consequences if an accident or incident occurs involving their vehicles. On the other hand, dealers do need to be self-insured or have active insurance coverage for their vehicles, which ensures that they are protected against damages and losses. Additionally, they are responsible for insuring their vehicle inventory, which safeguards the dealership's financial investment in their stock. Finally, mandatory insurance is a requirement in the vehicle sales business, reinforcing the necessity of having a valid and active insurance policy to continue operations without interruption.