Garage Insurance – what you need to know
Garages of all types have unique risks and insurance needs and in this video and post, I’m going to break it down to give you a better understanding of what you need and why you need Garage Insurance.
So, let’s start with the types of auto repair shops or garages that need insurance:
- Auto repair shops
- Tire dealers and installers
- General mechanics
- Muffler shops
- Transmission repair shops
- Auto body and collision repair shops
- Auto sound installation shops
- Auto detailing businesses
- Car customization shops
There are three main coverage parts to Garage Insurance that I want to go over.
The first is Garage Liability.
Garage Liability covers you, the garage owner, for liability claims which can arise in the ownership of your auto repair shop.
This includes the common slip and fall claims which can occur in and around your shop of non-employees.
Customers, visitors, vendors, and other non-employees who injure themselves on your premises can sue you for their injuries, and Garage Liability is the coverage part that would protect you from those claims.
It also covers liability claims which can occur while operating a customer’s vehicle, such as on a test drive or picking up or dropping off a car after it’s been serviced.
Here, I’m not talking about damages to your customer’s vehicle – that’s covered under Garage Keepers Insurance, which I’m going to go over in a minute.
What I am talking about are damages to third parties or bodily injuries to others.
So, you’re test driving a customer’s car and you hit a pedestrian or hit another vehicle and you’re sued for injuries or damages, those claims are covered under garage liability.
Garage Liability insurance is unique in that it covers premises liability, commonly the domain of general liability insurance, and also covers auto liability, commonly the domain of the commercial auto policy.
This type of insurance will also cover you for bodily injury or property damage claims which arise from your work. Say you do a brake job on a customer’s vehicle and accidentally don’t reassemble the brakes completely.
The customer picks up the car, drives home and on the way cannot stop in time at a red light and smashes into a car in front of them.
Any resulting injuries and damages to both your customer’s vehicle and the other vehicle will be covered under your garage liability portion of your garage policy.
For many garage operations, Garage Liability insurance is written as a BOP or business owners’ policy and is packaged with the next two coverage parts I want to go over.
If you have vehicles owned by your garage then it is common to have a separate auto policy or to have your garage insured on a garage auto policy form.
Garage Keepers Insurance
Garage Keepers Insurance provides protection for your customer’s vehicles for physical damage while those vehicles are in your care, custody, and control. You can see more about garage keepers and how it differs from garage liability
Physical damage is comprehensive and collision. That includes claims for things like fire, theft, vandalism, falling objects, and collision
Limits of Protection
For both Garage Liability and Garage Keepers, you need to select the limits of coverage you need. Typically Garage Liability insurance limits are $1 million or $2 million which can be supplemented by an umbrella policy.
Because of the broad set of risks, you face from premises liability, and auto liability, we recommend purchasing an umbrella policy to provide at least an extra $1 million limit of protection over and above your garage liability limits.
Garage Keepers Insurance Limits
You also need to select limits of comprehensive and collision coverage for Garage Keepers coverage. Often, we see garage owners skimp here and not insure the potential maximum loss that could occur for all the vehicles on their premises.
While it’s not common to have all your customers’ cars damaged in a single occurrence, it does and can happen.
So, we do recommend that you think about your potential maximum liability here so that you’re not left short and have to pay out of pocket for customers’ vehicle damages.
In a business owners’ policy or BOP policy that is often used to ensure garages of all types, the core garage liability plus garage keepers insurance we discussed is rounded out with property insurance.
This can include the building your auto garage operation is located in if you own the building or are required to insure it.
It will also include the contents in your building tools, equipment, office fixtures, etc. and lastly, it will include business income coverage, which we used to call business interruption insurance.
Business Income insurance is there to protect your cash flow and profits should you be forced out of your shop due to a covered claim and need to suspend operations.
Now, outside of the business owners’ policy, there are a few other coverages or policies considered.
This is to protect your employees from injuries and illnesses they incur on the job and to satisfy state mandates to carry this insurance.
Umbrella or excess liability insurance
To provide an extra layer of liability protection over and above your other liability policy forms which I mentioned earlier.
In some cases, if you own a tow truck or have a dealer or transporter plates there are some specialized coverages that need to be addressed as well which we can help you with.
How do you get a garage insurance quote for your auto repair shop?
It all starts with a conversation.
You may be facing issues or problems that need to be addressed and you need someone to vent to about them. Or maybe you are a startup and don’t know where to start, or you may have a big premium increase that’s motivating you to shop around.
Let’s have that conversation and see if we can help, which we likely can. I’ve been in the business for 40 years and there aren’t many problems or issues I haven’t seen or fixed!
From there I’ll ask you for a copy of your current policies as a baseline and then get some additional information from you so we can go to several of our insurers for competitive quotes.
Once the quotes are back, we’ll review them to find the best, and make that recommendation to you. I promise to make the whole process as painless as possible with no pressure or sales gimmicks.
Want to learn more? Let’s have a conversation and see if we’re a good fit for your business.