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Defining Mechanic E&O Insurance

Defining Mechanic E&O Insurance

April 25, 2022


Run an Autobody Shop? Here’s Why You Need Mechanic E&O Insurance 

The automotive industry encompasses a wide variety of different professions, including manufacturers of auto parts, technicians, painters, dealers, and mechanics. Each of these professionals has spent years perfecting and honing their craft, and likely no small amount of effort on creating and developing their business, either. Automotive industry professionals may work with a client’s most valuable assets. Suffice it to say, there’s a lot on the line. If something were to happen to one of those luxury vehicles in your shop, what would you do?  

Errors and omissions insurance, sometimes referred to as professional liability, is a type of insurance coverage that many associate with being solely for medical professionals or lawyers. These are the practices that we often assume will face the highest risk of a lawsuit, but any business that offers a professional service should have errors and omissions insurance.  

Here’s why it is necessary and how it helps. 

What Does E&O Insurance Do For a Mechanic? 

Auto body technicians, manufacturers, and dealers all perform a vital service, and they work directly with a client’s high-value assets. If a client should suffer a loss as a result of negligence, error, or omission in your work, or if you fail to meet a deadline, they could file a claim against you and your business. Mechanic errors and omissions insurance helps offset the serious financial ramifications that could come with such claims.  

While it depends on your exact policy and the carrier you are insured through, you may expect a standard mechanic E&O insurance policy to include coverage for: 

  • Negligence causing financial loss 
  • Errors while performing a promised service 
  • Omitting vital information, resulting in financial loss 
  • Lawsuit expenses, including settlements, defense costs, judgment awards

Mechanic errors and omissions insurance will not cover general lawsuit claims, such as if a client slipped and fell while attending your place of business or if their property was damaged as a result of your regular business operations. As such, a mechanic E&O policy is not a replacement for commercial general liability. For full, comprehensive coverage, your business should consider both policies to ensure it has adequate protection against potential lawsuits. 

What automotive industry professionals need mechanic E&O insurance? 

The automotive industry includes a wide range of different professionals. Everyone in this industry deals with a client’s vehicles in different ways. The following professionals may benefit from purchasing mechanic errors and omissions insurance: 

  • Mechanics 
  • Detailers 
  • Dealers 
  • Technicians 

If you work in the automotive industry but do not see your specialty listed above, contact Hitchings Insurance Agency to discuss options and whether a mechanic E&O insurance policy is right for you.  

Why You Need Mechanic E&O Insurance: 

Lawsuits can be expensive. As a mechanic, you should carry E&O insurance because it protects you as the business owner, as well as any of your mechanics or employees. This would come into play in the event of mistakes or faulty work, which could result in serious damages. Oftentimes, the items you work on at your autobody shops may be worth considerable amounts of money and something you are not interested in financially replacing yourself.

If you were to experience any of the following events, your mechanic E&O insurance may cover you: 

  • An auto body technician is buffing out some dents on a client’s convertible vehicle. In the process, the expensive fabric top is accidentally damaged.
  • You fail to disconnect the battery of a vehicle’s computer system before starting work, causing a shortage that necessitates the total replacement of the system. 
  • While performing a regular oil change, an employee gets distracted and forgets to re-install the oil drain plug bolt once the engine has been filled. After the engine starts, a rod is thrown and the entire engine is damaged.  

Scenarios like these where negligence resulted in expensive damages to a client’s vehicle can be covered by mechanic errors and omissions insurance. As good as you are at your job, accidents happen. When you work with such high-ticket items as autobody parts and vehicles, it’s a good idea to protect yourself as a single mistake could put you out tens of thousands of dollars.  

Secondary Errors and Omissions Coverage items  

  • Title Paper Preparation Errors and Omissions – coverage against negligent preparation of title paperwork. Legal suites could be filed by the lender of the vehicle or the legal owner of the vehicle. 
  • Odometer Errors and Omissions – Coverage for errors and omissions on odometer readings, prior vehicle damages, or aftermarket parts being used. Disclosure of vehicle history is strictly governed, so this is very important coverage for any garage that is selling or transferring vehicles.  
  • Truth in Lending and Consumer Leasing Acts – coverage for errors made during the lending process. Any violation that goes against the consumer credit or leasing law would apply here.  

How much does mechanic errors and omissions insurance cost? 

The cost of mechanic errors and omissions insurance is negligible when you compare it to the potential losses you could face in the event of a loss or a mistake. You can expect that your mechanic E&O insurance will vary in cost depending on these factors: 

  • Business’ history 
  • Insurance history 
  • Number of employees
  • Services performed
  • Location 
  • Years of experience 

No one mechanic will pay the same for their E&O insurance as another. See below for averages. In most cases, these coverage items are part of the entire package plan and are typically included by way of endorsing the full policy package. 

  • A mechanic working in the automotive industry may pay $25 per month on average for their E&O insurance coverage. This equates to $300 per year for mechanic E&O insurance. 

What other coverage options do mechanics need? 

Mechanic errors and omissions insurance will not cover you for physical losses nor will it cover any lawsuit expenses pertaining to general claims, like property damage or bodily injury. In order to have full, comprehensive coverage for your business, your liability, and the tools and equipment you use, you may want to consider all aspects of business insurance. Mechanics and automotive professionals may benefit from the following coverage options. 

  • Property insurance 
  • Commercial vehicle 
  • Workers’ compensation 
  • General liability 
  • Equipment breakdown 
  • Business interruption 

Your business is unique, so the coverage you need may vary as well. For a personal touch, review your coverage with a Hitchings Insurance Agency representative.  

Mechanic E&O Insurance Against Costly Errors 

You may be the best at what you do, but that isn’t always enough. Accidents happen. No matter how honed in we are at the practice or how many years of experience we have, we are still human. Even our long-term clients could file a claim against us for damages they suffered due to a small mistake made on the job. It’s better to be safe than sorry and purchasing mechanic E&O insurance is a small price to pay for huge protection.

If you own an autobody shop, garage, or other business in the automotive industry, call Hitchings Insurance Agency at 419-423-9145 to discuss options for E&O insurance. If it is easier, you can also complete this quick quote form to get the conversation started.