Does your small business work with cars or automobiles? If so, you might be wondering what type(s) of insurance is best for your business. Garage keepers insurance, for example, is what many shop owners use to protect their customer’s vehicles from being damaged while it’s in their care.

But what does garage keepers insurance cover? And is garage keepers insurance and garage liability insurance the same thing? (The answer is no). In this guide, we’ll answer your questions and more.

Garage keepers liability insurance is a specialty policy that auto businesses use to protect client’s vehicles (cars, trucks, vans, motorcycles) that have been entrusted to the garage for service or repair. In states such as Virginia or Texas, it is referred to as ‘storage location insurance.’ Regardless of what it’s called, it provides property insurance coverage over the client’s car, protecting it from the following perils:

  • Fire
  • Theft
  • Vandalism
  • Collision

Because the type of garage keepers insurance you select could impact your business, clients, and reputation, you need to be able to make an informed decision. Typically, garage keepers coverage provides three primary coverage options, including:

Legal liability coverage – Legal liability coverage is the most common type of garage keepers insurance coverage. It only covers losses when an employee is legally liable for the damage to the customer’s vehicle, whether from negligence or mistake.

For example: If a mechanic were to crash the vehicle while test driving it, or if they forgot to set the parking break and it rolled into the garage pit, the insurance protection would apply since your employee was at fault.

Direct primary coverage – This type of garage keepers insurance makes sure that the client’s vehicle is covered regardless of who’s liable or at fault. It allows the garage owner to take full charge and responsibility for any vehicle that is kept in the shop. This provides customers with the peace of mind that their vehicle will be guarded no matter what happens.

For example: If weather damages a car or should a thief break in and steal a locked vehicle, the insurance coverage would pay for damages or losses even though the garage did not do anything wrong. So, a customer wouldn’t have to file a claim under their own auto policy.

Direct excess – A less common but slightly cheaper alternative, direct excess functions similarly to a direct primary coverage policy, except for the fact that if the insured isn’t liable, the coverage would only pay in excess of any amount that is collectible under the owner’s standard auto policy.

For example: If the customer’s truck is destroyed by a fire that burns down your shop, and their vehicle was insured with comprehensive coverage under their personal auto policy, their comprehensive coverage would kick in. Once the coverage limit had been hit, direct excess could help cover the rest of the vehicle damages.

If your business regularly takes custody of a customer’s vehicle, you take on a significant amount of risk. Therefore, it’s your duty to make sure that your business is covered with a garage keepers insurance policy. Businesses that regularly do so include:

  • Body shops
  • Car dealerships
  • Custom shops
  • Detailers
  • Electronics installers
  • Interior detailers
  • Oil change servicers
  • Parking garages and lots
  • Repair shops
  • Service stations
  • Smog test and emissions tests shops
  • Tow truck operators
  • Valet services
  • Windshield and window installers

As with almost every other type of insurance policy, garage keepers insurance doesn’t provide your business with carte blanche protection from all types of risk. There are several damages that won’t be covered and several coverage exceptions. These include:

  • Faulty workmanship
  • Contractual obligations with a service station or dealer
  • Vehicle theft by an insured
  • Loss of stereo equipment that’s not permanently installed
  • Radar detection equipment
  • Defective parts
  • Personal items of the client that were left in the vehicle

From repair shops to body shops, many small business owners get confused about garage keepers liability and garage liability insurance policies. Naturally, many assume that they are one in the same, but they are not.

For starters, their protection and their coverage differs. How so?
Well, you know now that garage keepers is a unique policy that protects a client’s vehicle while they are in your custody from four main perils:

  • Fire
  • Theft
  • Vandalism
  • Collision

Garage liability, on the other hand, protects your business from general liability issues that may come up during your garage business’ daily operations. It often acts as a blend of commercial auto insurance and general liability insurance. It usually covers the following types of damages:

  • Third-party injuries
  • Third-party property damage
  • Liability costs
  • Structure repair

Put simply, garage keepers protect the customer’s vehicle from unexpected damages (besides workmanship), whereas garage liability insurance protects the business itself from damages to third parties that occur along the line of duty.

Garage keeper insurance is one of the best ways you can give customers peace of mind and mitigate their worries. But you can’t stop there. You also need to make sure that your business is protected from third-party liability with a general liability insurance policy.

Thimble provides insurance for tomorrow, today. We’ve designed a system where small businesses can purchase policies by the hour, day, or month, only paying for insurance when they’re on the clock. If you need a general liability policy, you can get one in under 60 seconds. It’s that fast.

Just download the Thimble mobile app, input a few details about your business, and we’ll generate a quote immediately. From there, you can click to purchase and have a COI in your email inbox or on your phone instantly. Need to add Additional Insureds or generate more COIs? You can do so from the comfort of your phone—completely free.

When all it takes is one slip and fall to hurt your business, you need to do everything you can to reduce your risk profile. Your job is to keep your client’s cars safe and working properly. And it’s our job to make sure that your business can keep firing on all cylinders.


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.