Garage Liability Insurance: Cost, Coverage & Providers

Garage liability insurance is a policy auto repair shops, dealerships, tow truck drivers, and service stations need. It covers third-party bodily injury and property damage caused by garage operations as well as vehicles in the business’s care, custody, or control. The annual cost of garage liability insurance typically starts between $300 to $1,000 annually.

Providers such as CoverWallet make getting garage liability insurance for your small business easy with online quotes and experts available to provide individual guidance and make sure you are properly protected. Complete a free, no-obligation questionnaire online and get covered in minutes.

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Top Garage Liability Insurance Providers

Garage liability is a unique insurance product and can be difficult to find. Not every insurance carrier offers garage general liability, so businesses in the automotive industry may have the best luck going to a top business insurance broker. This way they can access multiple carriers that write garage liability policies and compare offers.

CoverWallet

CoverWallet is a great choice for car dealerships, both new and used. The insurance partners CoverWallet works with are capable of handling the high dollar value of a thousand cars on a lot or the risk of consumers on test drives. Being able to compare policies online easily helps small business owners see how much each insurance carrier charges and weigh the cost against the policy details.

Farmers

Farmers is a national carrier specializing in small business insurance, and it is a good option for auto repair shops with multiple locations. It can provide coverage for cars stored on-premises or at another location while being worked on. Agents at Farmers are available for policyholders seeking to implement better solutions for safety and loss mitigation, keeping premiums down and customers happy.

CoverHound

CoverHound is ideal for garage owners who need to cover equipment damage, botched repairs, and even personal injuries. As an online broker, CoverHound can connect you to a variety of insurance providers that offer policies to cover every risk. Their online application is fast and easy, or you can call to speak with a representative directly who can help you find garage liability plus other policies you may need.

AP Intego

AP Intego is a good fit for auto glass installation companies because of the mobile nature of the business. The brokers work with providers that understand the need to protect employees and materials in transit, installations at in-house shops, third-party repair facilities, or consumers’ homes. The need to protect risks in all of these scenarios is unique in the automotive services industry, and AP Intego addresses exactly that.

Liberty Mutual

Liberty Mutual is a well-known brand that offers multiple policies to tow truck companies, including commercial auto, general liability, property, and garagekeepers insurance. However, the highlight is its on-hook endorsement that covers damage to other people’s vehicles while they’re being towed. Liberty Mutual can give small business owners higher personalized attention that helps mitigate risk and reduce premiums based on accurate business underwriting practices.

How Garage Liability Insurance Works

Garage liability covers claims similar to general liability insurance, namely injuries and property damage your business operations cause a third party. However, garage liability specifically covers incidents caused by garage operations. Let’s say a mechanic is driving a customer’s car and hits another vehicle. Garage liability pays for the damage to the other vehicle but not the customer’s car. For this, the mechanic needs garagekeepers coverage.

Garage liability insurance is usually triggered by:

• Bodily injury: A vendor’s medical bills after she breaks her leg falling into the service bay
• Property damage: A customer’s repair bills after a hydraulic lift smashes his laptop
• Products and completed operations: A customer’s medical and repair bills after a mechanic fails to tighten the lug nuts when changing her tire

Insurers who offer garage insurance can usually endorse the policy so that it includes coverage found in general liability, such as personal and advertising injury. This can be a convenient way for business owners in the automotive industry to get their fundamental exposures covered through a single policy.

What Garage Liability Insurance Covers

Garage liability insurance covers allegations made by nonemployees that your garage operations or operations necessary or incidental to your garage business caused them harm. If a third party, like a customer, vendor, or bystander, claims they suffered bodily injury or property damage, garage insurance pays their medical and repair costs or your legal defense.

This coverage extends to the person or business named on the policy, or the named insured, plus the named insured’s employees, partners, directors, and shareholders as long as they are acting within the scope of their duties.

What Garage Liability Insurance Doesn’t Cover

Perhaps the most important exclusion in garage insurance is the exclusion for damage to vehicles under the care, custody, or control of the business. This means a customer’s claim his vehicle was damaged or stolen while it was kept at your business is not covered. These types of claims will need a separate, optional coverage called garagekeepers insurance.

Some additional garage insurance exclusions are:

• Injuries to employees
• Damage and injury caused by pollution
• Product recall costs
• Professional or organized racing or demolition activities

Garage Liability Insurance vs Garagekeepers Coverage

Garagekeepers insurance is an optional coverage designed for businesses that keep customers’ vehicles on their lots. It essentially covers what garage liability excludes, autos in the business’ care, custody, or control, by paying for repairs when those vehicles are damaged, lost, or stolen.

Garagekeepers insurance covers damage caused by:

• Theft
• Fire
• Vandalism
• Extreme weather
• Collision

Typically, garagekeepers liability insurance only covers damage to or theft of the vehicle itself, not the contents. You can, however, add endorsements to include items left in the car.

Who Needs Garage Liability Insurance

Garage liability, sometimes called auto repair shop insurance, extends beyond repair facilities. The policy is appropriate for any automotive business because it covers damages and injuries related to garage operations whether or not a vehicle was involved.

Small businesses that typically need garage liability insurance include:

• Auto body shops
• Auto repair shops
• Service stations
• Auto glass installers
• Emissions testing centers
• Oil change and lube shops
• Detailers
• Tow truck operators
• Parking garages
• Car dealerships

Any business working on or with vehicles needs to have garage liability insurance. Some businesses are required to carry coverage to get licensed, but even when it’s not mandated, garage liability insurance is a smart investment to guard against accidents turning into financial disasters.

“Every auto repair professional needs to make sure that their​ garage and the customers are covered in case of any accidents that can cause bodily injury to the customers or damage to their vehicles. Coverage should include risks like theft or property damage related to a part or a technician.”
―Jesse Yuvali, Owner, Jesse’s Garage European Auto Repair

Garage Insurance Costs

Garage liability insurance tends to be more expensive than general liability because the nature of the work is physical and exposes people to contaminants. Annual garage liability insurance costs typically fall between $300 and $1,000. However, business owners usually need other business insurance policies, such as garagekeepers insurance and workers’ compensation. This can increase your total annual costs to between $2,000 to $6,000.

Typical Garage Insurance Costs & Deductible by Policy

Premiums vary by state, with workers’ compensation insurance having the widest variances based on payroll, specific business, and state ratings. Garage insurance costs are dependent on activity and risk. Physically larger shops have increased injury risks as do shops with higher foot traffic. Insurance companies may use annual revenues as an indicator of overall risk.

Additional Types of Garage Insurance

Every small business faces multiple exposures. At the very least, any business in the automotive industry should have garage liability, plus garagekeepers coverage if customers leave vehicles with them. However, businesses may also face risks like property damage and employee injury, and these require other insurance policies.

Workers’ Compensation Insurance

Workers’ compensation insurance is a state-mandated policy that pays for your employees’ medical bills and loss of income when they’re injured on the job. It’s important to note that if an employee receives workers’ comp benefits, that person usually cannot later sue you for the incident.

For example, a mechanic severs a finger in a winch gets a long-term disability settlement via the workers’ compensation policy and is unable to return for more later via lawsuit. Your workers’ compensation costs depend on the number of employees you have and the risks they face.

Business Owner’s Policy

Some carriers can add garage liability and garagekeepers insurance to a business owner’s policy (BOP). BOPs typically combine general liability with business property for small business owners, so adding garage liability means automotive businesses can get their fundamental coverage from a single carrier.

Most BOPs also include business interruption insurance to cover ongoing expenses if your shop is forced to close temporarily due to a covered event. It can also pay for additional leased space to run business operations while the primary location is unusable.

Commercial Vehicle Insurance

Any business-owned vehicle should be covered by commercial auto insurance to pay for third-party property damage and bodily injury in at-fault accidents. Most states require liability insurance, but some business owners opt for additional coverage, such as collision insurance to pay for damage to their vehicles.

While commercial vehicle insurance often has an option for medical payments coverage to pay the first-person medical bills, injuries to employees are typically covered by workers’ compensation. Commercial auto medical payments are additional coverage if injuries exceed workers’ comp limits.

Commercial Umbrella Insurance

Commercial umbrella insurance extends the limits of liability coverage on other lines of commercial insurance, including garage liability and commercial auto. It is cheaper to buy an umbrella policy, adding an extra $1 million in coverage than expanding coverage on all policies.

Commercial umbrella works by picking up when a claim exceeds the limits on underlying liability policies. For example, say your courtesy shuttle driver causes a serious accident that involves three other vehicles. Your commercial auto insurance covers the damage to the other vehicles, but the repair bills are more than the limits on the policy. Your umbrella insurance kicks in to pay the rest up to its limits.

Tips on Getting Garage Liability Insurance

There are many different types of businesses associated with the automotive industry, so the specific insurance needs vary greatly. Below are a few key pointers for determining the best coverage for your business.

Understand Your Business Needs

Complete a business profile to present to the insurance carrier to make sure all pertinent risks are addressed. While you may be calling for garage liability, knowing you also need business property, garagekeepers, and workers’ compensation helps to price the risk properly. You may also get discounts for having certain policies with the same insurance carrier.

Have Relevant Documents and Figures

Most insurance policy premiums are rated based on revenues, property value, and payroll. In the case of garage liability insurance, the carrier will want to know your revenues, location, business structure, years in business, and the years of industry experience each owner has. Getting the pertinent documents ready expedites the quoting process, especially if you have an auto shop loan that requires the insurance.

Shop Rates Among Different Carriers

Different insurance carriers have different risk tolerances in different states (even counties). It is worth shopping around to ensure you get the best possible rate for the right coverage. Make sure you go through the line items so that you know what coverage specifics are included in each quote.

Garage Insurance Frequently Asked Questions (FAQs)

Buying insurance to protect your business is not always easy, especially if you don’t know what to look for. Below are answers to some of the most FAQs about garage liability insurance.

Is a mechanic liable for damages from repairs?

Mechanics are liable for damage resulting from incorrectly done repairs. Auto services companies are expected to perform duties professionally than keeps cars functional and safe. If improper repairs result in property damage or injury, garage liability insurance most likely covers it. In a lawsuit, the mechanic has to pay his defense costs out of pocket if he doesn’t have this insurance,

What happens if a garage damages your car?

A car in the care, custody, and control of an auto shop is the responsibility of the auto shop. Garages should have garage liability insurance with garagekeepers coverage to pay for claims over accidental damage to cars in their care. Claims on these policies include loss due to perils, such as theft, vandalism, or fire.

Do auto dealers have insurance?

Auto dealers typically need the same insurance other businesses need, such as commercial property, general liability, and workers’ comp. However, certain situations call for additional coverage. Auto dealers that have garages need garage liability and garagekeepers insurance. Dealers with open lots most likely need coverage for wind and hail damage.

Bottom Line

Garage liability insurance is an essential policy for businesses in the automotive industry because it protects them if someone claims their garage operations caused injury or property damage. However, business owners often need additional coverage, such as garagekeepers, to pay for damage customers’ vehicles left in their care.

CoverWallet makes it easy to combine these two essential policies into one with its garage business owner’s policy. In five minutes, garage owners can get a competitive quote that covers the biggest risks and includes business interruption coverage, all combined into one easy-to-understand policy.

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