Automotive Repair Shop Insurance

What Are Common Auto Repair Shop Risks?

To get a better idea of the types of auto repair business insurance repair shop owners should carry, here are some of the risks for which an owner could be liable:

Employee Injury

Auto repair employees have a higher risk of injury. Accidental slip-and-fall injuries and repetitive use injuries are common. You may need to cover lost wages or even a lawsuit.

Customer Injury

A customer could have an accident in your shop just as easily as an employee. You want to be covered if a customer slips on a small oil spill and injures their back.

Vendor Injury

You may rely on many vendors to operate your auto repair business. Vendors will typically require you to cover injury or damage claims that occur while they're working with you.

Vehicle Damage

Customers leave their vehicles in your care. If an employee wrecks a customer's vehicle on a test drive or somebody breaks into it, the customer can sue you for the damage.

Damage to Other People's Property

A technician could accidentally hit the neighboring business' fence while moving a customer's vehicle. You could be held responsible for the damage.

Damage To Your Own Property

You could have a fire, a burst water pipe, or vandalism. You'll need a business property insurance policy for property and equipment insurance coverage for any damage.

Mechanic Errors

We like to think our mechanics are infallible, but they aren't. A mechanic error that leads to an auto accident makes you responsible.

Cyber Liability Insurance

There was a time that a repair shop owner would not have had to worry about cyber security. But if you store customers' personal information and credit card data, you could potentially get hacked and then sued.

What Kind of Business Insurance Should Auto Repair Shops Carry?

An insurance agent can best advise you of all the coverages you might need, but here is a list of common coverages for auto repair shop owners.

General Liability Insurance

General liability covers injuries to customers (not employees) and basic auto repair business risks, such as a piece of equipment injuring a customer at your shop. It also may be required to have regular business liability insurance to qualify for contracts and leases or even a mechanic's license.

Commercial Property Insurance

This insurance provides property and equipment insurance for property and items owned by the business and kept on the business' property including the auto repair shop building itself. Some shop owners may be able to save by bundling property insurance and general liability insurance into a business owner's policy (BOP). Or if you also own the tow truck service or have a car wash on site, you could look into combining multiple policies.

Workers' Compensation

Workers' comp will cover employee medical expenses, partially missed wages, and lawsuits over injuries. It also covers injury costs for independent contractors that their health insurance doesn't cover.

Garage Insurance

Garage insurance will pay for repairs, medical expenses, and other costs related to an accident or injury in the garage. Garage insurance may supplement or replace some of the insurance mentioned above and is specific to auto repair shops and dealerships.

Here is a closer look at garage insurance.

What To Know About Garage Insurance

An auto repair shop might need two types of garage insurance: garage liability insurance and garage-keepers insurance. One covers liability and the other physical damage.

Here's what to know about each to better assess any coverage gaps you might have.

What Is Garage Liability Insurance?

Garage liability insurance is similar to general liability insurance, but it is specifically for business owners that service and sell vehicles. Sometimes there is an overlap between garage liability insurance and other small business coverages.

A garage liability insurance policy helps a repair shop owner cover lawsuits and medical costs from the injury of someone while on their business premises. It does not cover the following types of claims:

• Employee Injury: If an employee is injured while performing their duties and incurs medical costs, such a claim would fall under a workers' compensation policy.
• Garage Damage: Physical damage to the garage building would be covered under a commercial property insurance policy
• Client Property: To fully protect client property and customer vehicles stored in your garage, you will need to add garage-keepers coverage.

An insurance agent can help ensure you don't have any coverage gaps and aren't paying for coverage you might not need.

How Does Garage Liability Insurance Differ from General Liability Insurance?

Garage Liability Insurance typically includes commercial auto liability coverage and general liability coverage.

General liability covers injury that occurs at your garage and accidental damage to other people's property that does not involve your insured vehicles. The commercial auto liability covers those involving your insured vehicles and when your employees drive someone else's car for work purposes.

What Is Garage-Keepers Insurance?

This type of insurance is an additional coverage necessary for any business that services, repairs, or stores customer vehicles. It protects your business and your customers' cars if something happens while in your possession or while you are "keeping" them at your facility. A policy will provide various coverage other than collision or overturn.

This insurance protects your business in a few ways. It can cover:

• Damage to customers' vehicles damage from theft or extreme weather loss.
• Customers' vehicles in cases of damage due to negligence.
• Accidental damage, whether a mechanic accidentally breaks something during a repair or damages a customer's car while performing a test drive.
• Loss of income if your business is closed due to a covered loss. 

Garage-keepers insurance does not usually cover mechanic errors, defective parts put into customers' vehicles, or theft of personal possessions inside customers' cars.

How Does Garage-Keepers Insurance Differ from Garage Liability Insurance?

Garage liability insurance does not cover anything that happens to the tools, building, personal, or business property. So things like vandalism, stolen vehicles, or damage from a severe weather event would not be covered by garage liability insurance. 

Garage liability insurance does not cover damage or accidents to customers' cars on-site for service, but garage-keepers insurance does.

How Much Does Auto Repair Shop Insurance Cost?

The cost of a garage liability insurance can depend on many factors, such as:

• How much revenue your shop generates
• Where your business is located
• The coverage limits you need
• Your deductible
• Your coverage options. 
• Types of repair services you offer
• The amount and value of the equipment at your garage or shop
• If you bundle more than one type of coverage
• If you have any shop certifications
• The total value of customer vehicles you could potentially keep on the premises at once
• The number of work vehicles you own and how they are used
• The number of people you employ

Each agency writes and bundles auto repair shop insurance policies differently, so pricing will also vary. Just remember that insurance costs are significantly less than the cost of loss you could incur by not having the proper protections in place.

Tips for Buying Business Insurance

While an insurance agent can best advise you on the types and amounts of coverage you need, these tips can help when you talk with an agent:

• Don't consider underinsuring on coverage you think you won't likely use just to save money.
• Make sure you have enough coverage to cover every customer vehicle that could be in your possession at any one time.
• Consider getting more liability coverage than you think you need. The increased cost for extra coverage is usually not too much more.
• Have an agent walk you through all of your coverage so you fully understand what is and, more importantly, what isn't covered.

Make Sure Your Auto Repair Shop Has the Proper Coverage

Owning and operating an auto repair shop comes with a lot of risk and liability, so you want to make sure you do not have gaps in your business insurance coverage. An insurance agency specializing in automotive insurance can help ensure you have the suitable types and amounts of coverage for any accident, injury, theft, or damage that could occur on your property.

In addition to protecting your business, auto repair shop insurance might be required to get an auto mechanic business license in your state or lease or purchase a bay or shop. Garage insurance will also give customers peace of mind that their vehicle is protected while being serviced.

Garage insurance should financially support your business if a lawsuit or accident occurs. You need to be covered. Talk to your insurance agent today. Contact Balsiger Insurance here.