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insurance for auto mechanics how does it work

Insurance for Auto Mechanics: How Does It Work?

April 25, 2022


Insurance for Auto Mechanics: How Does It Work? 

As an auto mechanic, you’re also running a business, and running any kind of business comes with its own unique set of risks. You might think that as a business owner, you’ll be fine with any casual business owner’s insurance policy. Well, that’s not always the case. Auto mechanics insurance, garage coverage, or “garagekeepers” insurance is vital to have, and they need to be tailored uniquely to match the needs of your specific business. You deal with expensive assets, valuable pieces, hefty equipment, and potentially hazardous materials. Here’s what auto mechanics insurance is and how it helps: 

What Insurance for Auto Mechanics Covers 

Auto mechanics need a lot of the basics, including commercial property, business interruption, commercial general liability, and so forth, but they may also require specific coverages that are tailored to running an autobody repair store. What does a comprehensive insurance package for auto mechanics cover? Let’s break it down into its separate parts. 

Commercial Property Insurance 

Every business with a physical location requires commercial property insurance. Standard coverage will include damages due to fire, storms, natural disasters, theft, and vandalism. Your business property makes up your business and is essential to what you do. If something happened, you might not be able to operate for a period of time. Consider all your integral buildings, including your main building, secondary buildings, and your property’s contents as well. Machinery and equipment may need separate insurance (typically in the form of coverage known as equipment breakdown insurance). 

General Liability Insurance 

If your business operations resulted in a client or third party having a bodily injury or property damage, your general liability insurance (or CGL) would cover you for any risk that you could be held liable for. This does not include specific liability that comes out of special garage operations. For that, you would need special auto mechanic liability coverage. 

Garage Liability Insurance 

Garage liability insurance protects what you do to others while handling a customer’s car. This protects your business if the vehicle owner does not have liability coverage for their own vehicle, and it may also provide protection if something happens to the customer’s vehicle as a result of your garage’s operations. Say, for example, during a test drive you run into another person’s car. Garage liability insurance would help cover the cost of damages. 

Garagekeepers Insurance 

Garage liability and garagekeepers insurance may sound the same, but they are entirely different. Garage liability coverage may cover damages or losses to others while you have a customer’s car. Garagekeepers insurance covers the physical cars you have in your shop if they were to become damaged while in your possession. Here are some examples of garagekeepers coverage: If your shop were to catch fire with customer vehicles parked inside, or your customer’s vehicle was stolen from your shop, or if one of your employees gets into an accident while test driving a customer’s vehicle after installing a new set of brakes. You may be legally liable to replace your customer’s vehicle. These are the purposes of garagekeepers coverage.  

Note, however, that any commercial vehicles you have that are owned under your business should be insured via a separate business auto policy. 

These are just a few samples of the coverage you may benefit from. Consider the following as well: 

  • Business interruption insurance 
  • Commercial vehicle insurance (for vehicles owned by the shop) 
  • Equipment breakdown insurance 
  • Workers’ compensation insurance 
  • Business income insurance 
  • Cyber liability insurance 
  • Commercial umbrella insurance 

Mechanics Professional Liability  

Mechanics Professional liability is a must for any auto repair facility. Nobody intends to improperly repair a vehicle, use a faulty part, or install the incorrect part. Accidents happen. You need to have the coverage in place that covers these errors.  Here are some examples we have seen.

  • An incorrect sized timing belt was installed on a car. The customer took the vehicle home. Shortly after the belt blew and caused extensive engine damage, and a new motor needed to be installed.
  • An incorrect set of brake pads were installed on a customer’s auto, which then lead to an accident. The mechanic’s professional coverage kicked in and paid for both of these claims and didn’t require the shop owner to pay for the incidents out of pocket.   

Things to Consider with Auto Mechanics Insurance 

Running an auto repair or autobody shop is no walk in the park. There are a lot of moving parts to consider – literally. It’s risky business with an autobody shop, as you’re working with heavy machinery, equipment, and vehicles. You’ll want to review your auto mechanics insurance policy to guarantee that you have enough coverage for every aspect of your business, ensuring that your business is insured to its full replacement cost. Moreover, you’ll want to assess your liability limits. Lawsuits are expensive, and a cap of $500,000 may not cut it. You may want to increase to $1 million or $2 million or potentially higher, depending on your business and your agent’s recommendations.  

Another thing to consider is how many commercial vehicles are within your possession at one time. How big is your shop? You’ll need to gauge your garagekeepers insurance limits based on the overall value of the vehicles in your care at one time. Consider your busiest possible scenario and gauge your coverage from there. For other coverage options, review this with an insurance professional. They’ll be able to give you the scope of what makes the most sense for your industry, business, and physical location. 

Auto Mechanics Insurance Cost 

The big question whenever it comes to business insurance is always the cost. How much is auto mechanics insurance? The answer largely depends on the type of business you run, among many other factors. You can expect your premiums to vary depending on these variables: 

  • Location 
  • Number of employees
  • Size and scope of your garage 
  • How many cars are on hand at your busiest time? 
  • Insurance history 
  • Business experience and history 
  • Past lawsuits 
  • Physical business property 
  • Coverage options 

For small shops, we’ve seen comprehensives plans as low as $2,500 per year. For large operations with extensive inventory schedules, property schedules, and commercial autos, we have customers who pay over $100,000 per year.  There are numerous factors that go into pricing as mentioned above.  

An insurance professional, like the expert agents from Hitchings Insurance, will be able to help walk you through your options. Call Hitchings Insurance today at 419-423-9145 to discuss auto mechanics insurance and what coverage is best for you and your circumstances. If you prefer, you can also complete this brief form to get started!