What Is Garage Liability Insurance?

Jul 2, 2023 | Business Insurance, Personal Insurance

Automobile dealerships, parking lot or parking garage operators, tow-truck operators, service stations, and customization and repair shops will add garage liability insurance to their business liability coverage. The policy covers property damage and bodily injury caused by operations. This is not the same thing as garage-keeper insurance. Garage Liability Insurance — insurance that protects franchised and non-franchised automobile, truck, truck-tractor, motorcycle, recreational vehicle, and trailer dealers from bodily injury (BI) and property damage (PD) claims arising from business operations. It contains two separate insuring agreements, “who is an insured” provisions, and “limit of insurance” provisions—one for garage operations involving the ownership, maintenance, or use of automobiles, and the other for all other garage operations.


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How Garage Liability Insurance Works?

Garage liability insurance is a type of umbrella policy that provides coverage for the day-to-day operations of automotive businesses. This insurance will supplement the general liability policy of the company. Coverage includes bodily injury and property damage caused by direct garage operations, which are not typically covered by commercial or business liability insurance.


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Before purchasing a policy, the business owner should ensure that the garage liability coverage supplements, rather than simply replaces, their basic business liability coverage.

Up to the policy’s chosen limits, coverage will include injuries to customers while on business grounds. Furthermore, most garage insurance policies include an employee dishonesty provision for theft or vandalism committed by an employee of a customer’s vehicle. The company may add any autos used in the course of business, such as courtesy vans and parts delivery trucks, for an additional premium. The company may also add coverage for damages from parts or products sold by the company, as well as coverage for loss from faulty parts installed on a client’s vehicle, as additional safeguards.

Garage liability insurance does not cover the policyholder’s tools, building, personal, or business property. It does not cover vandalism, stolen vehicles, or damage caused by events such as hail. The policy does not cover accidents or damage to the customer’s vehicles while they are being serviced. Furthermore, all basic and additional policy items will have a listed maximum liability coverage amount and may have aggregate limits by claim or year.


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The levels of coverage in commercial general liability (CGL) insurance policies vary. This insurance may include premises coverage, which protects the company from claims made on the premises during normal business operations. It may also include coverage for bodily harm and property damage caused by finished goods.


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What types of businesses require garage liability insurance?

Garage liability insurance is required for any business that maintains, repairs, sells, or stores vehicles in a public area. Among these companies are:

Automobile dealerships

Automobile repair and body shops

Shops for oil changes, mufflers, and tyres

Towing services

Parking lots and impound lots

Garage owners and businesses that store vehicles


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What kind of protection does garage liability insurance provide for automotive businesses?

Garage liability insurance protects against a variety of risks associated with automotive business operations, such as:

Injuries to customers

If a customer or visitor is injured in your garage or auto shop, garage insurance will cover their medical expenses.

Damage to customer property

This policy covers the cost of repair or replacement for any property belonging to customers or visitors that is damaged in an accident on our property. Please note that customers’ vehicles are not included in this coverage.


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Legal fees

If a customer sues your company because of an accident that resulted in bodily harm or property damage, this policy will help cover the costs of your legal defence. Settlements and court-ordered judgments are also covered.

Repair flaws

Most garage policies include products-completed operations coverage. This coverage helps pay expenses if a customer is injured or suffers other damages as a result of a defective part, faulty repair, or other liability claim related to your services or parts.


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What is not covered by garage liability insurance?

Garage insurance does not cover your commercial property, such as the building, tools, and equipment. Commercial property insurance, which is included in a business owner’s policy, covers these (BOP).

Other common risks that garage liability insurance does not cover include:

Garage keepers’ liability insurance covers damage or theft to customer vehicles.

Commercial auto insurance covers damage to your commercial vehicles.

Workers’ compensation insurance covers employee injuries (required in most states).


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What is the distinction between garage keepers and garage insurance?

While businesses that store, repair, or maintain vehicles frequently purchase both, it’s important to note that garage keepers insurance and garage liability insurance are not the same.

Garage keepers liability insurance, also known as storage location insurance, protects your business while a customer’s vehicle is in your care, custody, or control. Thus, it safeguards against fire, vandalism, accidental damage, and theft. This includes damage caused while transporting or testing a customer’s vehicle.

A mechanic scraping a cinderblock while moving a customer’s car for an oil change would cause accidental damage to the car’s bumper, which a garage keeper’s policy would cover


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How do I obtain liability insurance for my garage?

By completing Insureon’s simple online application, you can compare quotes for general liability insurance and other policies from top-rated providers. In addition, speak with an agent about your garage insurance options.

If you are unsure about which type of insurance your small business requires, you can speak with a licensed agent about policies such as business owner’s policies, commercial auto insurance, and workers’ compensation. You can begin coverage in less than 24 hours after selecting a policy.


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Garage Liability Does Not Exist Coverage for Garage Keepers

Garage-keeper insurance is a separate policy that covers property damage to a client’s vehicle while it is in the policyholder’s care. This coverage includes damage that happens during road test drives and while the vehicle is stored during non-working hours. Thus, the keeper’s insurance covers vandalism and theft of a customer’s car. Businesses with multiple locations must have policies in place for each location.

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