General liability insurance does not provide enough coverage for businesses like auto repair shops, dealerships, tow truck drivers, and service stations—these businesses need garage liability insurance. While garage insurance is similar to general liability, it comes with provisions for third-party bodily injury and property damage from garage operations and vehicles in the business’ care, custody, or control. The annual garage liability insurance cost typically ranges from $1,300 to $2,500.
Insurers like ERGO – Next Insurance make it easy to get garage liability insurance for your auto repair shop. In just minutes, it can generate tailored policy package quotes, giving you the freedom to determine which is best for your business. After purchasing the policy online, you can get a certificate of insurance (COI) in minutes.
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Garage Liability Insurance Costs
Garage liability insurance costs usually fall anywhere from $1,300 to $2,500 annually. It normally costs more than general liability, but that is because auto service and repair shops are inherently riskier than, say, a clothing store. Garage owners may also need other lines of business insurance, like commercial auto, property, and workers’ compensation.
| Coverage | Estimated Annual Premium | Coverage Amount | Typical Deductible |
|---|---|---|---|
| Garage Liability | $1,150 to $2,500 | $1 million | $1,000 |
| Garagekeepers | $1,000 to $3,100 | $75,000 | $500 |
| Commercial Auto | $1,300 to $11,000 | $500,000 | $500 |
| Commercial Property | $1,000 to $2,500 | $100,000 | $500 |
When providers are calculating the premium for a garage insurance policy, several factors are considered, including the following:
- Location
- Specific operations (e.g., body shop, dealership, service station)
- Business revenue
- Number of employees
A business owner’s policy (BOP) is one option to save. If the provider offers it, this is a policy where the garage liability and garagekeepers can be added to the property insurance to create one single policy for first- and third-party coverages. Providers will usually offer this package at a lower rate than if every policy was purchased separately.
Read our high-level guide if you’re looking for
ways to save money on business insurance
.
How Garage Liability Insurance Works
Similar to general liability insurance, garage liability offers coverage for injuries and property damage to third parties that are caused by your business operations. Personal and advertising injury, a standard in general liability, are usually available for garage liability via an insurance endorsement.
However, the key difference of garage liability is that liability is extended to include other people’s property. For example, if a mechanic test-drives a customer’s car and hits another vehicle, garage liability pays for the damage to that other vehicle. Unfortunately, the customer’s car is not covered. For that, you need garagekeepers coverage.
As a third-party liability policy, garage insurance covers allegations of negligence by your business that resulted in some form of harm. This can take the form of the following:
- Bodily injury: A customer’s medical bills after they trip and sprain their ankle in the waiting room
- Property damage: A customer’s bill for camera equipment in their trunk damaged when the car was lowered off the lift
In rare instances, providers will offer an endorsement for faulty workmanship.
Perhaps the most important exclusion in garage liability insurance is the one for damage to vehicles under the care, custody, or control of the business. If a customer claims their vehicle was damaged or stolen while it was kept at your business, this exclusion prevents the policy from covering this loss.
However, there is an optional coverage, or provision, called garagekeepers insurance. This covers autos in the business’ care, custody, or control by paying for the associated costs when the vehicle is damaged, lost, or stolen.
Like other vehicle theft claims, the coverage is for the vehicle, not its contents. Garagekeepers insurance covers damage caused by the following:
- Fire
- Vandalism
- Extreme weather
- Collision
- Theft
There are other exclusions, or incidents that are not covered by the policy. Common exclusions for a garage insurance policy are as follows:
- Injuries to employees
- Damage or injury caused by pollution
- Product recall costs
- Professional or organized racing or demolition activities
Who Needs Garage Liability Insurance
Any business in the automotive space that works directly with customer vehicles should consider garage liability insurance. Some small businesses that usually need garage insurance are as follows:
- Auto body shops
- Auto repair shops
- Service stations
- Auto glass installers
- Emission testing centers
- Detailers
- Tow truck operators
- Parking garages
- Car dealerships
Some industries require coverage to get licensure or certification. But even if it is not mandated, garage liability insurance is a wise investment for the financial health of your business.
Best Garage Liability Insurance Providers
- ERGO – Next Insurance: Best for auto body shops
- The Hartford: Best for mechanics
- Progressive Commercial: Best for tow companies and impound lots
- Nationwide: Best for service stations
- Tivly: Best for finding garagekeepers liability insurance
ERGO – Next Insurance: Best for Auto Body Shops
The Hartford: Best for Mechanics
Progressive Commercial: Best for Tow Companies & Impound Lots
Nationwide: Best for Service Stations
Tivly: Best for Finding Garagekeepers Liability Insurance
Frequently Asked Questions (FAQs)
Mechanics are liable for damage resulting from incorrectly done repairs. Auto service companies are expected to perform duties professionally so that autos are functional and safe. If faulty workmanship results in property damage or injury, garage liability insurance likely covers repair costs and medical bills. However, it does not cover the work itself.
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.
Auto dealers typically need the same insurance that other businesses need, like commercial property, general liability, and workers’ comp. However, most will also have garage liability and garagekeepers insurance. Dealers with open lots may also need coverage for wind and hail damage.
Bottom Line
Businesses in the automotive industry need to consider garage liability insurance because it protects businesses if someone claims that their operations caused injury or property damage. Many business owners need the additional coverage of garagekeepers to handle damage to customer vehicles left in their care.
ERGO – Next Insurance makes it easy to customize the level of coverage to fit the size of your business. A quote is available within minutes, online, for same-day coverage.
