If you own a small business that operates within the automotive industry, customers not only trust you to fix and handle their vehicles, they also expect that you keep their beloved property safe while it’s under your supervision. But accidents happen, which is why auto businesses purchase garage liability insurance.
Do you know what garage liability insurance covers? Also, are you aware of the differences between it and garage keepers insurance?
This guide will answer those questions and more. So, keep reading to discover everything you need to know.
What is garage liability insurance?
According to the International Risk Management Institute, garage liability insurance is “insurance covering the legal liability of franchised and non-franchised automobile, truck, truck-tractor, motorcycle, recreational vehicle, and trailer dealers for claims of bodily injury and property damage arising out of business operations.” 1
To put it more simply: Garage liability insurance protects your small business from liability of accidents resulting from the daily operations of your garage business. It tends to be a specialty insurance that supplements three other types of liability insurance policies:
- General liability for garage operations
- Garage keepers legal liability
- Commercial auto policy for garage operations
What does garage liability insurance cover?
Typically, a garage liability insurance policy will help pay for the following damages:
Third-party injuries – If someone is hurt in your business garage (not including employees), you might be considered legally liable for their injury and held responsible for their medical bills.
For instance, oil is a common spill on a garage floor. This can lead to clients slipping and injuring themselves. Should they require hospitalization, surgery, or physical therapy, your garage could be held liable. Garage liability insurance can help cover these costs.
Third-party property damage – This protects you if you or an employee damages someone else’s property.
For example, in a crowded garage, cars sometimes need to be rearranged. If your employee drives a car off the lot to open up space and some form of damage occurs, the client (third party) could claim property damage to their vehicle, and your business could be liable. Your policy would provide coverage for the costs of repairing the vehicle.
Product liability – If you make or sell items in your shop that damage a customer’s car, they could blame you for selling a faulty product.
For instance, if you install a defective part which leads to damage to the vehicle or causes an accident, garage liability insurance would help protect you from the associated costs.
Liability claims – Your shop is vulnerable to various other liabilities resulting from general business operations, including discrimination or employee dishonesty.
For example, should an employee claim that they were fired for discriminatory reasons, your policy could help cover the legal fees to fight the case or the damages if you’re found liable.
Important distinction: Garage liability insurance does not cover damage to clients’ vehicles being repaired or injury to employees.
How much does garage liability insurance cost?
The cost of a garage liability insurance will depend on a few factors, such as:
- The coverage limit you select
- The annual revenue from your business
- The deductible you choose
- The coverage options you pick
Who needs garage liability insurance?
Garage liability insurance is tailored to businesses within the automotive industry. Generally, a garage liability insurance policy will cover both an auto services business as well as the vendors who supply them with parts or equipment. That said, you may want to consider purchasing a garage liability insurance plan if your shop operates as any of the following:
- Automobile dealerships
- Repair shops
- Customization shops
- Auto body shops
- Detailing operations
- Auto glass installers
- Oil change shops
- Electronic repair and installation shops
- Smog test shops
- Interior restoration detailers
- Parking garage operators
- Parking lots
- Tow truck operators
- Service stations
- Valet services
Garage liability insurance: not garage keepers insurance
It’s important to draw a distinction between garage keepers insurance and garage liability insurance. These are not synonyms for the same policy. Although they are related and have some coverage overlap, garage keepers insurance is a separate policy that covers property damages to vehicles that are in the “care, custody or control” of your shop.2 Covered damages could include:
- Accidental damage to vehicle such as a collision
- Extreme weather
For instance, if theft occurs at your shop and a customer’s car is stolen, you could be held liable for the lost property. Garage keepers insurance would help you repay the customer for the stolen vehicle.
Garage liability vs. general liability
Because there’s crossover between general liability insurance and garage liability policies, many people are confused about the difference between the two. They’re left wondering whether they should get one or the other.
Truthfully, it’s important that you have both types of policies in order to cover exposure gaps. Put simply, they provide protection for different things:
Garage liability – A garage liability policy is more limited in scope. It protects garage operations and liability of business-owned vehicles.
General liability – A general liability policy covers liability exposure for third-party injuries and third-party property damage, but doesn’t provide auto coverage.
Since every business has different risks, it’s important to weigh the pros and cons, and consider your particular exposures. By taking the time to assess your operation, you can make an informed decision about the type of coverage (as well as the coverage limits).
Thimble: covering your business from general liability
If you work in the auto industry, you’re regularly exposed to risk. And, as a small business owner, your job is to mitigate that risk, however possible. But how do you lower your risk profile and protect yourself from liability?
We provide general liability and professional liability insurance for businesses that work on-the-go. Our affordable on-demand policies are sold by the hour, day, week, or month. It’s insurance that works when you do.
Getting a policy with Thimble takes less than 60 seconds. Simply download the Thimble app or click on “Get a quote,” enter your ZIP code and a few minor details, and your quote will be generated instantly.
If there’s a chance that someone incurs an injury in your shop or that you damage a client’s property while providing your services, we can provide coverage with general liability insurance.
Oil changes, engines, and customizing rides is your specialty. Protecting you is ours.
Our editorial content is intended for informational purposes only and is not written by a licensed insurance agent. Terms and conditions for rate and coverage may vary by class of business and state.