(419) 423-9145

what is garage liability and who needs it

What is Garage Liability Insurance & Who Needs It?

April 13, 2022


If you work within the automotive industry, you may need a special policy known as “garage liability insurance.” This policy can also be referred to as “repair shop insurance,” but what it covers is the same: your business’ liability against bodily injury and property damage claims. Your business deals in the repairs, maintenance, servicing, storage, sales, or décor of your client’s valuable assets: their vehicles. Without this coverage, you could be left on the hook for some major costs.

Here is what it is and who needs it.

Garage Liability Insurance vs Garage Keepers Insurance

First thing’s first: it’s important to note that garage liability insurance is not the same as garage keepers insurance. They are commonly mistaken for one another, or policyholders simply assume that both coverages are included under a larger policy. This is not true. Garage keepers insurance and garage liability insurance are purchased as separate contracts and are designed to cover your business very differently. Note that while some insurers may provide both of these policies in a package, this isn’t always the case. It is best to review with an agent before making any assumptions.

Here’s the difference:

Garage keepers insurance is designed to cover the costs of any potential damage done to a client’s property – such as their vehicle – while it is being held in your care. This means that if the car was damaged or lost while in your garage or shop, you would have protection for the replacement or repair costs. Covered perils may include things like theft, vandalism, and natural disasters. It may also include coverage for vehicles that are damaged during test drives.

Garage liability insurance, on the other hand, is designed to protect you from third-party liability claims for damages to property or injuries. As you can see, these coverages do go hand-in-hand, so it’s important to consider the worth of both.

Are Mechanics Insured to Drive Any Vehicle?

Mechanics are an imperative part of the garage! Along with the work they do on vehicles, they often times need to drive it to make sure everything is working properly. This imposes a risk when operating someone else’s vehicle. In the event something does happen, is the mechanic insured? Garage keepers insurance would provide coverage in this situation. This is another reason why it is important to know what your coverages actually insure.

Who Needs Garage Liability Insurance?

This coverage is imperative for more than just garages or autobody repair shops. The following professions can benefit:

  • Glass installers
  • Valet drivers
  • Tow-truck drivers
  • Emissions testers
  • Painters
  • Auto body technician
  • Car rental agents
  • Service stations
  • Parking garages

Your policy may vary in its exact coverage depending on the profession you do, as no one faces the same risks. Discuss with your Hitchings Insurance Agency representative if you work in the automotive industry but your profession wasn’t listed above to determine if garage liability insurance is for you.

What Does It Cover?

Garage liability insurance is designed to protect businesses in the automotive industry from a number of general liability risks that may be associated with the operation and ownership of an automotive business, garage, or repair shop. You may expect the following to be covered:

  • Property Damage – If a vehicle under your care is damaged, stolen, or lost while on your property or being taken out for a test drive, repairs and replacement costs will be covered under your garage liability insurance policy.
  • Bodily Injury – If a customer is injured while on your property, your garage liability insurance may cover any medical bills and/or expenses related to a potential lawsuit.
  • Product Liability – If you were to install a defective component on a customer’s vehicle and it caused damage or losses, you would have protection for the consequential expenses. This is also known as mechanics professional liability.

Note that garage liability is liability insurance, so it will not cover physical risks that could be impactful to your business. It will also not cover the contents within a client’s vehicle, any machinery or equipment that you use on the job, faulty workmanship, loss of income, or damages to your physical repair shop. Garage liability insurance should be just one component of a larger policy that extends to cover your entire business.

How much does it cost?

The costs differ depending on the exact service your automotive firm provides. It can range into the more costly sides of liability insurance policies due to the larger risk posed by the majority of garage repair shops. This is especially true if your business employs heavy machinery, hydraulic lifts, and corrosive materials to perform jobs.

You may expect the following factors to sway your overall costs for garage liability insurance:

  • Your shop’s location
  • Multiple locations
  • Number of staff employed
  • Your projected annual revenue
  • Your physical property – size, materials, etc.
  • Your claims history
  • Your business history
  • Your business operation type

The cost of garage insurance can vary from $1,000 up to $50,000+. This is all dependent on your individual operation and has too many variables to be specific with an example. Auto dealers with floor plans are much more costly to insure than a small auto service garage or autobody.

How to get it

It can be difficult trying to understand what specific insurance policy you need. With the autobody industry, it can be complicated! The Insurance Professionals at Hitchings Insurance Agency help to get you insurance that is fitted to the specific way that your automotive firm runs and can get you quotes or answer any questions you might have about this coverage.

It is designed to provide financial aid in the event that your business experiences a liability-related loss. This allows you to continue building your business and servicing customers in the way that you do it best without much disruption. Start today with a quote.