What is Garage Liability Insurance?
It protects your premises, products, operations and completed operations against any work you may do on a customer's vehicle which might result in bodily injury or physical damage. It will also cover automobiles owned by your business (they must be listed in the policy), but not customers' vehicles stored on your premises or left in your custody. (The latter are covered under a Garage Keepers policy, previously discussed in Part 4 of this series on Tow Truck Insurance.)
Some tow operators might think they don't need Garage Liability coverage because they don't own an actual "garage". Unfortunately, many insurance agents unfamiliar with the towing industry may think the same and suggest you skip this coverage. Much of the confusion surrounding the need for Garage Liability results from the insurance industry's definition and use of the term "garage".
It can mean any physical location of your towing business, office, service station, parking lot, storage area, etc. and extends to the day-to-day operations (necessary or incidental), stock, products and contents associated with the business. So, you can see that Garage Liability not only covers risks directly associated with a "garage", but those associated with its operations regardless of whether you own a "garage" or not.
Check with a knowledgeable insurance agent for any applicable state, municipal or federal laws or codes governing Garage Liability requirements as they relate to your towing operations. For example, in Illinois, tow truck operators are required to carry Garage Liability in order to operate legally. There are several variables affecting the cost of this coverage, to include:
*Location(s) of your towing operation (each 'garage' must be covered)
*Size of your business
*Type of towing vehicles owned, age of vehicles, condition, etc.
*Number of employees, their age, driving records and years of experience
*Radius of operations
*Lot protection (perimeter fencing, covered lot, well lit, paved, security, etc.)
Be certain to check your Garage Liability coverage for any Exclusions and Limitations which may have been written into the policy. Protect your investment and livelihood by reviewing your policies annually (at minimum) with your insurance agent to ensure you have adequate tow truck insurance.