Like any business, auto repair shops and the mechanics that own them need to get the proper business insurance in place. Whether a home garage—or a leased or owned location—if you’re working on someone’s car, you must protect your auto repair shop with the right liability insurance.
What Should be Included in Auto Repair Shop Coverage?
There are some basic policies and some specialty business insurance coverage(s)to consider:
Garage Liability Insurance: Garage liability insurance is the first piece of putting together an auto repair business insurance package. No matter how diligent you are, accidents happen. A general liability policy will cover the costs of third-party bodily injury or third-party property damage, including: Medical expenses, property replacement or repair, court costs, legal fees, and damage awards. All of these things can be expensive and can financially ruin a business if you don’t have the proper coverage in place.
Business Property Insurance: Property insurance is the next insurance a repair shop needs. Property insurance protects the building structure and furnishings as well as some equipment in case of damage by fire, natural disasters, or vandalism. Additional options that should be discussed include employee’s tools, debris removal, pollutant clean up, equipment breakdown, computer equipment, and boiler and machinery insurance.
Business Owners Policy: A business owner’s policy (BOP) can provide a good insurance package by combining general liability and property insurance. Some BOP’s also include coverage for business interruption insurance.
Business Interruption Insurance: Business interruption (also referred to as ‘Business Income’) helps cover lost profits, operating expenses, payroll costs, taxes, and debt repayment if your business property is damaged or unsuitable to use for a certain length of time.
Garage Keepers Insurance: Garage keepers insurance also needs to be discussed if you are keeping customers vehicles for a period of time. Garage keepers coverage offers protection in case a customer’s car is lost or damaged while under your care and control.
Workers’ Compensation Insurance: If the auto repair business has employees workers' compensation insurance is required (in almost all states). While every state varies in specific standards, we recommend having workers' compensation in place from the first employee hire. workers’ compensation can help cover lost wages, medical expenses, and legal costs and settlements if an employee becomes ill, injured, or even dies on the job.
Tow Truck Insurance: This is a type of commercial auto insurance specifically written for tow vehicles. It should include ‘on-hook coverage’ to cover accidents or mishaps while towing someone’s vehicle. If you are towing vehicles, tow truck insurance will cover liability and damage claims in transit to the repair shop as well as bodily injury and property damage.
Equipment Breakdown Coverage: As an auto repair business owner you will need coverage for your tools. Equipment such as lifts and compressors should have protection for replacement costs so that if disaster happens you can get your equipment replaced and get your business back on track again.
Employee Theft and Crime Coverage: This protects your business from being liable from employee theft and/or fraudulent activity.
Insurance Helps You Manage Risk at Your Auto Repair Shop
What’s the worst that could happen? If you take a look at even some basic incidents that could happen at auto repair shops, you’ll understand the necessity for insurance coverage and minimizing your liability:
Example #1: Your employee just finished replacing a part in a customer’s car and is test-driving it to make sure everything is running properly. Unfortunately, as they’re pulling back into the lot the employee gets in an accident. Garage Keepers Insurance can help cover the cost of repair when a vehicle is damaged in your care.
Example #2: A car lift malfunctions and an employee’s hand gets trapped and ends up breaking. Workers’ Comp Insurance helps pay for the employees medical expenses and lost wages while they’re waiting for their hand to heal.
Example #3: One of your employees is towing someone’s vehicle back to your repair shop and the towed vehicle breaks loose. Luckily, it didn’t cause a car accident, but does cause significant damage to the vehicle being towed. Tow Truck Insurance (a type of commercial auto insurance) will help cover the cost to fix the car.
Example #4: A customer slips on some oil on your garage floor and falls, hitting their head on the concrete. They’re rushed to the hospital and are kept there for observation from a concussion. Your Garage Liability Insurance policy will cover their medical expenses and a potential monetary settlement. This most basic business insurance can keep a small business from going bankrupt.
How Much Does Insurance for Auto Repair Shops Cost?
Cost depends on a variety of factors, including:
- Size of the the shop
- Age of the property
- The number if employees
- How long you’ve been in business
- Deductibles and coverage limits
Some companies—such as CoverWallet—offer general liability starting at $39 a month. They also offer comprehensive business owners policies + workers compensation starting from $89 a month.
Don’t assume your auto repair business is adequately insured. Talk to a licensed insurance professional who understands the needs of your business. Together you can design a plan to meet both risk and the budget.
Get a Free Auto Repair Shop Insurance Quote
Let us help you protect your small business and keep your mind at ease. At CommercialInsurance.Net, our goal is to help you protect your business as efficiently as possible. Insurance for shop owners doesn’t have to be expensive—get a competitive business insurance quote from one of our specialists by completing the form above. We will contact you soon!
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