Garage Liability or Garagekeepers? That is the question.

How Garage Liability Insurance Works

Garage liability insurance is just referring to general liability insurance for garages. General liability insurance, which primarily protects against claims arising from third-party bodily injury or property damage. It’s the most common type of insurance garage owners need, regardless of how big your business is.

Auto Repair Shop owners and other like businesses can combine their general liability, property insurance, and sometimes other coverage types into one bundled package called a business owners policy BOP. A BOP allows you to pay one insurance provider and one monthly payment for all of your coverages through that provider. This is also typically a way to save money as opposed to buying each individual coverage separately.

1. Get the Right Garage Insurance Coverage

Most businesses will need multiple types of garage insurance in order to be fully covered, but what you need will depend on the nature of your work and the size of your business. In fact, you may need multiple types of insurance for a single accident in order to escape without a huge financial burden to your business. It’s important to get the right coverages to have a peace of mind about your day-to-day operation.

When buying insurance, you are buying protection from risks. In the garage business, some of the biggest risks that need to be covered include bodily injury and property damage to third parties. However, you also need coverage for the theft of or damage to your tools and machinery or damage to your customers’ vehicles while under your care. The greater your exposure to these risks, the more coverage you’ll need.

1. Garage Liability Insurance

If you are buying the basic garage liability insurance coverage type, it will be a commercial general liability insurance policy, which covers third-party bodily injury, property damage, medical bills and related expenses. This coverage is important for garage business owners because your greatest risk exposure is claims from injuries and property damage to your customers.

For example, if a customer slips and falls at your shop, garage liability insurance will cover medical bills and legal fees if the customer sues. Also, if you damage a customer’s vehicle while it is in your shop, garage liability covers this as well. Every garage business owner should have this basic form of garage liability insurance.

2. Garagekeepers Insurance

Garagekeepers insurance covers your customer’s vehicle if it is damaged while left in your care or at your shop overnight. This coverage is not the same as general liability, which covers bodily injury and property damage resulting from your work or negligence. Garagekeepers insurance will cover damage not caused by you, such as fire, theft and weather.

For example, let’s say your customer leaves her vehicle at your shop overnight for repair. When you return to the garage in the morning, you discover that someone has vandalized the vehicle. Garagekeepers insurance will cover the cost of repairs. If you keep your customers’ vehicles in your care, you’ll need this insurance coverage.

“To understand the difference between garage liability and garagekeepers insurance, consider the following example: A customer brings in their vehicle for repair. Your mechanic takes the vehicle for a test drive and, in the process, hits another vehicle. In the accident, your mechanic totals the third party’s vehicle and injures its driver. Your mechanic also totaled your customer’s car that he was test driving. The third party’s bodily injuries and their vehicle are covered by the garage liability policy. The damage to your customer’s vehicle is covered by garagekeepers insurance.”

Who Needs Garage Liability Insurance

Every garage-related business will need at least the minimum garage liability coverage, which covers third-party bodily injury and property damage. Many will also need garagekeepers insurance, which covers your customers’ vehicles while under your care, such as overnight storage. There are several business types that typically have both types of coverage and more added to the policy.

Here are garage businesses that typically have both garage liability insurance and garagekeepers insurance, according to Trustway:

  • Auto repair shops
  • Service stations
  • Tow truck operators
  • Auto body shops
  • Detailing operations
  • Auto glass installers
  • Oil change and lube shops
  • Vehicle painting and pinstriping operations
  • Sound repair and installation shops
  • Emissions testing sites
  • Vehicle interior restoration shops

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