Insurance for Mechanics and Auto Repair Shops
Looking for Business Insurance for your Auto Repair Shop, Garage, Mechanic Shop, or similar repair shop?
There are dozens of types of operations that fall into the automotive repair, sales, and service industry sector. Auto body shops, mechanical repair shops, garages, transmission shops, collision centers, etc. Looking for the right business insurance can be confusing. You may ask yourself on this journey: Who do you turn to? Who has the best rates? Where am I going to feel comfortable insuring my business?
On this page, we will break down the big coverage issues garage owners need to be thinking about when it comes to getting the right insurance. To kick it off, here are the top three things you should do before getting quotes on your renewal or your new garage.
Top 3 Reasons To Purchase Insurance for Mechanics and Auto Repair Shops
- Do your research and be prepared with all the necessary information to get a quote. This includes having copies of your policies ready. Still, you also need to think through critical information, such as your property values for your building if you own it, and the business property or contents in your shop. Too often, I’ve seen garage owners unintentionally under-insure their property because they’ve not done an inventory of property at full replacement value.
- Loss information/claims history – before you go out to get quotes, I also recommend reviewing your claim history for the past five years. This can be done by asking your current insurer for a copy of your loss runs. Prior claims affect the price you’ll pay for insurance, and often loss runs will be required to document your file. Knowing what claims you’ve had in the past before speaking to an insurance broker is helpful, and if you can identify the steps you’ve taken to prevent those claims from occurring again, the better off you’ll be.
- Understand the insurance marketplace. There’s a general tendency of business owners to engage multiple brokers to shop for their insurance policies hoping that competition will deliver them the best results. Unfortunately, this bidding or shopping process doesn’t really work for business insurance. Insurance companies will only quote your account for one broker at a time, and when multiple brokers are engaged, what usually ensues is chaos. Our advice is to be strategic and find a broker that represents a wide array of insurers that specialize in automotive accounts and speak to them about what you’re looking to accomplish. If you find one broker you like and are comfortable with, have them exclusively represent you in the marketplace
In this video, we go into more detail about how to successfully get the right insurance for your business. I’d love an opportunity to speak with you further about your business insurance and how The Coyle Group process works to get you the best the market has to offer.
What’s in an Automotive Garage Business Insurance Program?
The common policies found in most auto services-related companies include the following:
- A BOP or Business Owners Policy covers most property and liability exposures within most garage operations. This will include protection for your building, contents, and business interruption exposures, your general garage liability, and your garage keepers insurance, which is explained in more detail below. Also included in a BOP are crime coverages, including employee theft, which is important.
- Sometimes a BOP policy won’t fit certain operations, and a Garage policy is required, which provides general garage liability protection as well as garage keepers coverage.
- In many BOP and Garage policies, it’s possible also to include Mechanics E&O insurance which covers you for faulty work or mistakes that result in damages to what they are working on. Car detailing and car washing establishments especially need this coverage element for possible claims arising from damages to overheating paint while polishing.
- Garage Keepers coverage and Garage Liability insurance are two different things that are often confused. Garage Liability protects you from claims that can arise from things like slips and falls and defective repairs that lead to bodily injury or property damages. Garage Keepers protect your customer’s vehicles from physical damage while in your care. That could be a collision, vandalism, fire, or other cause of loss.
- Workers’ Compensation to protect your employees from on-the-job injuries.
- Commercial Auto Insurance if your garage owns autos used in the business, including Tow Trucks, which also need specialized coverage known as “on hook” coverage.
- Umbrella or Excess Liability Insurance provides an extra layer of liability protection above your general liability and auto liability policies.
- Cyber Insurance – every business has the potential for loss from cyber risk, so having the right protection is critical.
- Employment Practice Liability – protects the company and its owners from claims alleging a wrongful employment act such as harassment, discrimination, wrongful termination, and more.
Do you need every policy listed here?
Maybe not, but this is a broad outline for all types of automotive accounts. If you contact us, we will work with you to customize a plan to fit your needs and your budget.
What type of Automotive Service Companies and Garages do we work with?
- General Repair / Mechanic Shops
- Auto Body / Collision Repair Shops
- Used Car Dealers
- Franchised Auto Dealers
- Motorcycle Dealers
- Specialty Restoration and Customization Shops
- Transmission Repair Shops
- Tire Dealers
- Auto Upholstery Shops
- Oil Quick Change Shops
- Muffler & Brake Service Shops
- Car Washes, Detailing, Hand Wash Services
- Auto Glass Shops
Do You Need Auto Repair Shop Insurance?
Most automotive shops and garages are small businesses. Still, they face a dizzying array of risk issues that must be addressed properly to avoid potentially crippling lawsuits and claims that could threaten the company’s existence. Let’s take a look at just two insurance elements here:
- Customers’ vehicles are in your care, custody, and control. Garage owners often underestimate the potential for loss in customers’ vehicles in their shop and yard. It may be that it’s never been brought up on each renewal, and the policy the shop owner took out five years ago or 15 years ago never got updated. Their business grew, and they never thought to increase their values. Or, the shop owner never considered that so many vehicles could get damaged at any one time. We have seen claims from fire, vandalism, windstorm, and hail cause widespread damage to almost all vehicles in a shop’s yard or garage, well exceeding the limit of protection purchased, so this is a risk well work evaluating.
- Liability exposures are significant in garage accounts. The traditional slip and fall type claims do occur in and around repair areas even when posted that customers are not allowed into the shop. Still, other liability risks come from the repairs that are made to a vehicle that could cause injury or damages once the car leaves your shop. The potential for a mechanical repair to fail and cause an accident is ever-present. This is why having good liability protection and umbrella insurance to give you a high protection limit is necessary.
What is the Best Insurance for Automotive Shops & Garages?
The best insurance for an automotive shop or garage is one that is tailored to your company’s specific needs and risks, and most importantly, it’s kept up to date so your limits don’t fall behind and expose you to uncovered claims. Part of our process here at The Coyle Group is a thorough onboarding process to ensure we understand what risks you face so we can tailor your policies to your needs, and then we update that every year on renewal. Plus, we’re always available for check-in calls or review calls when you want. A question on the minds of many garage and shop owners is what insurance company is the best to use for my business? It’s a good question, but it’s impossible to answer because no one or two insurers are always the best at any business class, including garages. On top of that, every insurer’s underwriting rates and rules differ from region to region, so one super competitive insurer in New York may not be at all in Arizona! What’s important to know is that The Coyle Group will leave no stone unturned to find you the best insurance program for your auto service business, large or small.
What is Mechanic’s E&O, and do I need it?
Mechanic’s E&O insurance covers a mechanic for faulty work that results in damages to the vehicle being worked on. It is an important coverage endorsement that can be added to most garage and BOP policies for automotive service businesses.
Here are a few claim examples of Mechanic’s E&O in action:
- While detailing a high-end Porsche, a tech pressed a bit too much on a polisher and caused a burn mark in the paint on the hood. Very noticeable, it couldn’t be buffed out, so the hood needed to be repainted at a cost of $1,200.
- A mechanic got distracted while doing an oil change and forgot to replace the oil plug. The mechanic didn’t notice the fresh oil drained out of the engine onto the shop floor under the car, and when the customer drove away a short while later, the engine seized and required a full engine replacement costing the shop over $6,000.
Why isn’t this covered by the basic general liability or garage liability coverage? Watch this video for more details.
How much is Auto Repair Shop Insurance?
If you search online for the cost of insurance for a garage or auto services business, you’ll see a lot of websites that give out crazy numbers, like as low as $57 a month. Frankly, this is pure nonsense and is a bait-and-switch tactic. Don’t fall for it. The cost of garage insurance is based on so many different factors, such as:
- The limits of coverage you purchase for property, garage keepers, etc.
- The construction and protective devices on the building you’re located in.
- Your claim history.
- The number of employees you have.
- The location of your business
- The level of control you have over risk in your business.
So, how do you find out the real cost and get the best deal on insurance?
In our opinion, you work with one insurance broker who represents several of the leading insurers that love insuring garage accounts. That way, you are well represented to the market in a consistent manner, without the headaches of shopping around yourself.
This video describes more about the pricing issue and what garage insurance costs:
Why get your Automotive Service Insurance from The Coyle Group?
The Coyle Group is a boutique insurance brokerage focused exclusively on insurance for business owners. We don’t get involved in home and auto insurance, benefits, or life insurance.
Because we have a laser focus on business insurance and specialize in 6 different business verticals, we’ve developed deep domain expertise with automotive-related accounts. We also represent the top insurers that focus on garages and auto accounts. These insurers are hungry for accounts like yours so I’m confident we can be competitive and offer you expertise to tailor a coverage package for your business.
Here’s the bottom line. You can call a big company and get their call center and never talk to the same person twice, or you can work with an entrepreneurial firm like ours that has a team of experts ready to assist you and build a relationship with you.
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