Garage liability insurance is a type of insurance designed specifically for the automotive industry. Garage liability insurance will be added to the business liability coverage of automobile dealerships, parking lot or parking garage operators, tow-truck operators, service stations, and customization and repair shops. The policy covers property damage and bodily injury caused by operations. This is not the same thing as garage-keepers 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. Any autos used in the course of business, such as courtesy vans and parts delivery trucks, may be added for an additional premium. Damages from parts or products sold by the company, as well as coverage for loss from faulty parts installed on a client’s vehicle, can be added 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 repair and body shops
Shops for oil changes, mufflers, and tires
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
If a customer’s or visitor’s property is damaged in an accident on your property, this policy will cover the cost of repair or replacement. Customers’ vehicles, however, are not included.
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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 defense. Settlements and court-ordered judgments are also covered.
Most garage policies include products-completed operations coverage. This coverage assists in the payment of 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:
Customer vehicle damage or theft is covered by garage keepers liability insurance.
Damage to your own commercial vehicles, which is covered by commercial auto insurance
Employee injuries are covered by workers’ compensation insurance (required in most states)
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What is the distinction between garage keepers and garage insurance?
Although both are frequently purchased by businesses that store, repair, or maintain vehicles, garage keepers insurance is not the same as garage liability insurance.
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. It safeguards against fire, vandalism, accidental damage, and theft. This includes damage caused while transporting or testing a customer’s vehicle.
For example, if a mechanic scrapes a cinderblock while moving a customer’s car for an oil change, the accidental damage to the car’s bumper would be covered by a garage keepers policy.
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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. 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-keepers insurance is a separate policy that covers property damage to a client’s vehicle while it is in the policyholder’s care. This includes damage sustained during road test drives and while the vehicle is stored during non-working hours. Vandalism and theft of a customer’s car are covered by the keeper’s insurance. Businesses with multiple locations must have policies in place for each location.
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