Garage Liability Insurance: Cost, Coverage & Providers

Garage liability insurance refers to insurance needed for auto repair shops, auto dealerships, tow truck drivers, and service stations. The primary coverage type is general liability insurance, which covers third-party bodily injury and damage or theft of machinery. The annual cost of garage liability insurance typically starts between $300 to $1,000 annually.

Garage liability insurance refers to insurance coverage needed for auto repair shops, auto dealerships, tow truck drivers and service stations. The primary coverage type is general liability insurance, which covers third-party bodily injury and damage or theft of machinery or vehicles on your premises. The annual cost of garage liability insurance averages $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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Garage Liability Insurance Providers

Small businesses working in the automotive industry often need garage general liability coverage and other insurance policies. The best insurance providers can price policies competitively and address the unknown needs many business owners don’t realize exist. Not every insurance carrier offers garage general liability; don’t confuse it with other general liability policies.

Top Garage Insurance Providers

Here are five providers that offer great garage insurance programs.

CoverWallet

CoverWallet is an online insurance broker utilizing technology to quickly compare multiple quotes from top insurance carriers they partner with. The award-winning platform is designed with small business owners in mind, removing much of the insurance jargon and replacing it with easy-to-understand information so that businesses understand how to choose the proper coverage.

CoverWallet platform 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 helps small business owners see where their premium dollars go with each insurance carrier.

Farmers

Farmers is a national insurance carrier specializing in insurance for small business owners, including small businesses in the garages and others in the auto industry. Farmers offers a variety of policies needed to protect garage owners from slip-and-fall accidents, damage to customers’ vehicles, and workmanship mistakes.

Farmers is a great choice for auto repair shops and auto body shops that have 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.

Insurance321

Insurance321 is an online insurance marketplace serving as the matchmaker for small businesses and insurance carriers. The process starts with a five-minute online application that gathers relevant information that Insurance321 uses to place the small business with a relevant carrier. One application allows small business owners to save time, confusion, and frustration.

Insurance321 works with carriers that are best-suited for transactional garages such as oil change shops, emissions testing centers, and services stations. These businesses generally don’t keep a customer’s vehicle under their care, custody, and control for extended periods of time reducing the risk. Less risk generates reduced premiums overall.

AP Intego

AP Intego offers you the ability to work with licensed agents to shop and compare multiple quotes from industry leading companies like Travelers and AmTrust at competitive prices. AP Intego matches businesses to insurance policies for virtually any field, including garage liability insurance and garagekeepers policies. They are a leading innovator of pay-as-you-go policies that particularly benefit companies requiring workers’ compensation insurance.

AP Intego is a good fit for auto glass installation companies because of the mobile nature of the business. AP Intego has providers who 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 Insurance is a national brand for personal and commercial insurance products including garage liability insurance and garagekeepers insurance. With local agents across the country, Liberty Mutual is able to give small business owners higher personalized attention that helps mitigate risk and reduce premiums based on accurate business underwriting practices.

Liberty Mutual Insurance is a good fit for a tow truck company or impound yard that hitches and transports vehicles with tows or semi-truck rigs. Incidental damages often occur when roadside assistance is provided or vehicles need to be moved within a space impound yard. Liberty Mutual Insurance rolled out The Liberty Mutual Trinity Towing Program to directly address these risks.

How Garage Liability Insurance Works

Garage liability, also called auto repair shop insurance, extends beyond repair facilities. This policy pays for claims or lawsuits if someone is injured or someone’s property (other than their vehicle) is damaged. It pays claims if someone slips and fall injuries or personal property damage such as a customer’s laptop that accidentally gets broken.

Garage insurance tends to be more expensive than other general liability policies due to the nature of the work with many tools and potential hazards such as contaminants. There are two primary considerations to understand these policies: what party is insured and what is the limit of insurance. The small business is the insured party, often starting with $1 million in liability coverage per occurrence.

Hydraulic lifts, heavy machinery, and tripping hazards are just a few of the common hazards in an auto repair shop that can lead to injuries covered by garage general liability insurance. Vehicles damaged under the care, custody, and control of the small business must be covered by garagekeepers insurance.

What Garage Liability Insurance Is

Garage liability insurance covers the financial costs of medical bills, personal property damage, and legal fees associated with third-party incidents on the business premises or from business interaction. This might include a stranded driver tripping on a tow truck driver’s chains, falling, and requiring medical attention.

What Garage Liability Insurance Covers

Garage liability insurance is a specialized general liability insurance policy for any business in the automotive industry. It is a specialized policy due to the increased risks of foot traffic and potential injury or property damage. The policy pays claims to third-parties such as consumers, vendors, or bystanders who may become injured or have property damaged as a result of normal business operations.

The types of incidents covered by garage liability insurance include:

• A car owner misstepping and falling down into the oil pit, breaking her leg.
• A child climbing on the tow truck and knocks his head on the boom resulting in a concussion.
• An elderly man is on a test drive for a sports car, and the sales representative tries to impress him with high-speed turns that trigger a heart attack.
• A patron of an emissions testing center is waiting for his car, working on a laptop. An employee walks past with a cup of coffee, getting bumped and spilling the coffee on the laptop, ruining it.

What Garage Liability Insurance Doesn’t Cover

Garage liability insurance does not cover professional liability claims or damage to the vehicles under the care, custody, and control of the business. This means auto repairs that are not done properly are not covered, nor is the actual vehicle if it is damaged or stolen from the business while being worked on. These types of claims will need a separate policy. Most of the incidents are covered by garagekeepers insurance with incidents, such as the brake failure being covered by professional liability insurance.

Garage Liability Insurance vs Garagekeepers Insurance

Garage liability insurance covers third-party claims of injury and damage to property except for the actual vehicles owned by clients or in the inventory. Garagekeepers insurance pays for repair or replacement of vehicles or vehicle parts damaged, lost, or stolen in the course of business operations or after-hours while being stored. Garagekeepers covers businesses with one or more locations.

The types of incidents covered by garagekeepers not garage liability insurance include:

• Thieves steal a Tesla in the middle of the night from the auto body shop fixing it
• A fire breaks out in an impound yard, damaging five vehicles
• The pulley holding a truck’s engine snaps and drops the engine, cracking it in several places
• A new Nissan Pathfinder is damaged during a test drive
• Repaired breaks fail a day after being fixed resulting in an accident

Who Needs Garage Liability Insurance

Garage liability insurance is for any business selling, transporting, or fixing vehicles. Vehicles include individual or fleets or automobiles, trucks, motorcycles, tractor-trailers, and trailers. General liability insurance might be required by landlords wanting to protect their assets should business activity lead to a claim.

Common small businesses that need garage liability insurance include:

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

Any business working on or with vehicles needs to have garage liability insurance. While it isn’t mandatory except in certain state business licensing environments, garage liability insurance is critical to preventing a financial disaster for small business owners who can’t afford to replace a car.

“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 Liability Insurance Costs

Annual garage liability insurance costs typically fall between $300 and $1,000. However, when all relevant coverage types, such as garagekeepers insurance, commercial vehicle insurance, and workers’ compensation are added, the total annual cost for small business owners ranges from $2,000 to $6,000 in premium.

Typical Garage Insurance Costs & Deductible

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 the risk of injury as do shops with higher foot traffic. Insurance companies may use annual revenues as an indicator of overall risk.

Garage Insurance Needs

Every small business has different insurance needs. At the very least, any business in the automotive industry should have garage liability and garagekeepers insurance. If the business has any employees, workers’ compensation is required. Other insurance policies to consider include professional liability, business property, commercial vehicle, and business interruption insurance.

Garagekeepers Insurance

Garagekeepers insurance covers your customer’s vehicle if it is damaged while left in your care or at your shop overnight. This coverage is not the same as general liability, which covers bodily injury and property damage resulting from your work or negligence. Garagekeepers insurance will cover damage not caused by you, such as fire, theft, and weather.

For example, let’s say your customer leaves her vehicle at your shop overnight for repair. When you return to the garage in the morning, you discover that someone has vandalized the vehicle. Garagekeepers insurance will cover the cost of repairs. If you keep your customers’ vehicles in your care even for short durations, you’ll need this insurance coverage.

Workers’ Compensation Insurance

Workers’ compensation insurance pays for your employees’ work-related injuries, medical bills, loss of income, and more. It’s important to note that if an employee receives workers’ comp wages while he or she is injured or ill from something that happened while on the job, he 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. The cost of coverage depends upon risk exposures and the number of employees working for you. Workers’ compensation is required in most states for business owners that have one or more employees.

Commercial Vehicle Insurance

Any vehicle used for business purposes must be properly registered and have commercial vehicle insurance will cover third-party liability to property, other vehicles, and bodily injury in at-fault accidents. This is important coverage for tow trucks, courtesy shuttles, parts delivery, and all other vehicles used for business purposes.

While commercial vehicle insurance often has an option for medical payments coverage to pay for drivers and passengers of the vehicle in an at-fault accident, employee drivers are covered by workers’ compensation with medical payments only being additional coverage if workers’ comp limits are met.

Professional Liability Insurance

Professional liability insurance protects a small business against claims and lawsuits that work was done incorrectly or not to professional standards, leading to loss or injury. The need for professional liability insurance increases when a business has more people working on vehicles that could potentially lead to error.

For example, a glass installation shop replaces a windshield. In a week, the car owner is driving down the highway when a small pebble hits the windshield, shattering the entire windshield and injuring the driver. The insurance company investigation demonstrates that the windshield failed due to installation error leading to a professional liability claim.

“It’s pretty rare to find any garage that has professional liability. The garage liability itself, while it excludes workmanship, provides coverage for consequential damage as a result of their work. For example, [they do] an oil change, and they forget to add back oil when they’re done, resulting in a ruined engine. The oil change isn’t covered, but the engine would be. [Another example would be if] a tire falls off after having them rotated.”
― Brad Schmid, Risk Advisor, CBIZ, Inc.

Business Interruption Insurance

Business interruption insurance covers a loss of income if your shop suffers damage and 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.

For example, if a fire did extensive damage to an auto body shop, closing it for business for several months, the lost revenue is recovered by business interruption insurance. Garage business owners that work in a location or environment that is at risk of fire or extreme weather may consider getting this coverage.

Commercial Umbrella Insurance

Commercial umbrella insurance extends the limits of liability coverage on other lines of commercial insurance. It is a cost-effective way to increase coverage on garage liability, professional liability, workers’ compensation, and commercial auto insurance policies. It is cheaper to buy an umbrella policy adding an extra $1 million in coverage than expanding coverage on all policies.

For example, a courtesy shuttle with an employee driver and four passengers is involved in a serious at-fault accident that involved three other vehicles. The commercial auto insurance will cover the damage to the other vehicles and injuries to their drivers and passengers. Workers’ compensation covers the injuries to the driver. Garage liability covers the passengers in the courtesy vehicle. If all of these liabilities exceed the individual policy liability limits, the umbrella kicks in and pays the difference up to its policy limits.

Business Owner’s Policy

Many carriers are now offering a combined garage liability and garagekeepers insurance policy rolled into one policy in a specialized business owner’s policy (BOP). These policies combine the general liability, business property, business interruption, and customer vehicles in the care, custody, and control of the shop into one policy. BOPs are cost-effective, often less expensive than getting individual policies because insurance carriers reduce costs with underwriting and administering the risk collectively.

Tips on Getting Garage Liability Insurance

There are many different types of businesses associated with the automotive industry like muffler shops or tire shops. This means that the respective insurance needs will vary among businesses. To help determine the best coverage for you, there are a few key pointers to remember.

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 at 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, property location, business structure, years in business as well as the years of industry experience the owners have. Having all 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 your insurance needs around to various carriers to ensure you get the best possible rate for the right coverage. Make sure you go through the line items confirming the proposed quotes are apples-to-apples comparisons.

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. If you still have questions after reading this article, please drop a comment below or visit our forum. Our mission is to provide you with the best answers to your questions.

Is a mechanic liable for damages from repairs?

Mechanics are liable for the damage resulting from incorrectly done repairs. Auto services companies are expected to perform duties in a professional manner than keeps cars functional and safe. If improper repairs result in property damage or injury, a professional liability insurance policy covers it. If a shop doesn’t have this insurance, the injured party can file a lawsuit.

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 both garage liability insurance and garagekeepers insurance to pay for claims from accidental damage to cars in their care. Claims on these policies include loss due to perils such as theft, vandalism, or fire.

Do car dealers have insurance?

Car dealer insurance is called garage liability and garagekeepers insurance. These two policies combined protect the business in different ways. Garage liability covers third-party injury and property damage. Garagekeepers insurance covers claims that the dealer may have damaged someone’s car like when they bring their car in for an oil change.

Bottom Line

Garage liability insurance is the number one insurance that protects a small business in the automotive industry from third-party claims of injury or property damage other than consumers’ vehicles. To cover vehicles in the care of the business requires garagekeepers insurance. The two policies together are the foundation for covering the most expensive risks these businesses face.

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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