Garage Liability Insurance: Cost, Coverage & Providers
Virginia has extensive experience writing about insurance and finance for a number of online platforms. She brings this expertise to business insurance and life insurance content across Fit Small Business.
Garage liability insurance is a policy that 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 $1,000 to $2,000 annually.
Providers like 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 protected properly. Complete a free, no-obligation questionnaire online and get covered in minutes.
How Garage Liability Insurance Works
Garage liability covers claims similar to general liability insurance, namely injuries and property damage that your business operations cause to people who aren’t employees. However, garage liability specifically covers incidents caused by garage operations like a mechanic test driving a customer’s car. If the mechanic hits another vehicle, garage liability pays for the damage to that vehicle. Unfortunately, the customer’s car is not covered. For that, you need garagekeepers coverage.
Insurers who offer garage insurance can usually endorse the policy so that it includes coverage found in general liability like 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, whether necessary or incidental to your garage business, caused them harm. For example, garage liability insurance is typically 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
This coverage extends to the person or business named on the policy, called 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 one for damage to vehicles under the care, custody, or control of the business. This means a customer’s claim that his vehicle was damaged or stolen while it was kept at your business is not covered. Remember the example of the mechanic causing an accident while test driving a customer’s car? Because the mechanic was in control of the customer’s car, garage liability insurance usually doesn’t pay for its damages.
Other common 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.
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, such as:
- Workers’ compensation insurance: Pays for your employees’ medical bills and loss of income when they’re injured on the job, like a mechanic severing a finger in a winch.
- Commercial auto insurance: Covers third-party property damage and bodily injury when you or your employees cause accidents.
- Commercial umbrella insurance: Extends the limits on underlying liability policies, including garage liability and commercial auto; usually a more cost-effective option than adding additional coverage on your liability policies.
Garage Insurance Costs
Annual garage liability insurance costs typically fall between $1,000 and $3,500. This is significantly more than general liability, but that’s because garage insurance covers businesses that face much more risk than most. Moreover, garage owners usually need other business insurance policies like 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
Coverage | Premium | Coverage Amount | Typical Deductible |
|---|---|---|---|
Garage Liability | $1,000 to $3,500 | $1 million | $1,000 |
Garagekeepers | $800 to $2,500 | $75,000 | $500 |
Commercial Auto | $1,000 to $9,500 | $500,000 | $500 |
Commercial Property | $800 to $2,000 | $100,000 | $500 |
Your location, specific operations, business revenue, and number of employees are just a few of the factors that impact the cost of garage insurance. To keep costs down, you may want to look for a carrier that 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.
Top Garage Liability Insurance Providers
Provider | Best For |
|---|---|
Garage owners and other automotive businesses that want fast garage insurance quotes | |
Auto body shops with offsite repair services | |
Mechanics seeking multiple policies | |
Tow and impound lots that want garage insurance and commercial auto | |
Auto dismantlers and salvage yards |
*Liberty Mutual quote provided by our partner Commercialinsurance.NET.
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 garage owners and auto businesses of all stripes. The insurance partners CoverWallet works with are capable of handling the high dollar value of a thousand cars on a lot or a customer’s injuries after slipping in an oil slick. Plus, CoverWallet lets garage owners easily compare policies online so that they can see how much each insurance carrier charges and weigh the cost against the policy terms.
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 being worked on at another location. Agents at Farmers are available for policyholders seeking better solutions for safety and loss mitigation, which helps keep premiums low.
CyberPolicy
CyberPolicy is ideal for garage owners who need to cover equipment damage, botched repairs, and even personal injuries. As an online broker, CyberPolicy can connect you to a variety of insurance providers that offer policies to cover every risk. Their online application is fast and easy, but you can also speak with a representative who can help you find garage liability plus the other policies you may need.
Progressive Commercial
While Progressive Commercial is a leading business auto insurance provider, the carrier also offers several key coverages for tow and impound lots, including garagekeepers legal liability, on-hook towing, and garage insurance. Additionally, tow lot owners who get commercial auto and have general liability or a BOP can earn a discount of up to 15% even if their commercial auto isn’t written through Progressive Commercial.
Liberty Mutual
Liberty Mutual* is a well-known brand that offers garage insurance policies to auto dismantlers, salvage yards, and “U-Pull-It” companies. The carrier partners with Watson Insurance Agency to bring these hard-to-cover business owners garage liability, commercial auto, general liability, property, and garagekeepers insurance. Moreover, policyholders can take advantage of safety resources, including access to a safety consultant, to help minimize claims and keep costs down.
*Liberty Mutual quote provided by our partner Commercialinsurance.net.
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 commonly asked questions 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 so that cars are functional and safe. If faulty workmanship results in property damage or injury, garage liability insurance most likely covers repair costs and medical bills. However, it does not cover the work itself.
For example, say a mechanic improperly patches a tire. The owner drives the car and suffers a blow out that causes him to run into another car. The owner’s hospital bills and the other car’s repairs typically are covered by garage liability. The mechanic, however, is responsible for replacing the customer’s tire.
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 can get a garage liability policy 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 like commercial property, general liability, and workers’ comp. However, most also require garage liability and garagekeepers insurance. Dealers with open lots may also 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 to 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.
