If you own a business in the vehicle services industry, you’ve probably come across the terms garage liability insurance and garage keepers liability insurance.
They sound the same but are two very different types of coverage.
They complement each other and work in tandem to provide a more complete level of liability protection for your automotive business.
This article will explain the two types of insurance, what makes them different, and all you need to know to get the proper protection for your business.
- What is garage liability insurance?
- What is garage keepers liability insurance?
- What’s the difference between garage liability and garage keepers liability coverage?
- Should I get both garage liability and garage keepers liability insurance?
- What kinds of businesses should get garage liability and garage keepers liability insurance?
- Am I required to get garage liability or garage keepers insurance?
- What other coverages do automotive businesses need?
- How much does garage keepers insurance cost?
What is garage liability insurance?
Garage liability insurance is a specific form of business liability coverage tailored to the unique needs of companies in the automotive industry.
Garage liability insurance provides protection for common incidents that happen when conducting business. This includes things like:
- Injuries to visitors to your workplace, such as a customer slipping and falling in your shop and breaking their leg
- Harm to other people’s property, for example, a mechanic dropping a heavy piece of equipment on a customer’s laptop or tablet device and breaking it.
If you don’t have garage liability insurance, costs related to these types of things, lawsuits, and settlements could be enough to put you out of business.
Learn more at the best garage liability insurance companies.
What is garage keepers liability insurance?
Garage keepers liability insurance protects vehicles you have in your possession but don’t own — usually customer cars you’re servicing or taking care of.
For example, a customer drops off a car for servicing or repairs. A mechanic drives it into the service bay and hits a bollard by accident. The incident results in a dented fender and other vehicle damage. Garage keepers liability protection would cover the repairs to the vehicle up to policy limits. You need this coverage because this type of incident is expressly not covered by garage liability insurance.
Learn more at the best garage keepers insurance companies.
What’s the difference between garage liability and garage keepers liability coverage?
Now that I’ve explained what the two insurances cover, let’s look at what makes each unique and I will explain why you need both.
Garage liability insurance protects you if a covered incident happens while doing business, whether it’s an injury to a customer or other non-employee at your workplace or damage to someone else’s property.
Garage keepers liability insurance helps pay for covered damages to your customers’ vehicles while they’re in your care and located on a covered property.
Garage liability specifically excludes coverage for vehicles left in your care that are damaged or stolen.
Garage keepers does not cover personal injuries that happen while doing business or damage to other people’s property outside of cars in your care. However, it covers the “vehicles in your care” coverage gap in your garage liability policy.
In short: Garage liability insurance protects your business against some of the primary risks it faces. Garage keepers insurance covers vehicles in your care that aren’t covered by your garage liability insurance. The two types of insurance, taken together, fill in the coverage gaps of each and provide your business with a more complete level of liability protection.
Should I get both garage liability and garage keepers liability insurance?
As covered in the previous sections, it’s probably wise for you to get both coverages, so your business is covered against injuries to visitors to your business location, damage to other people’s property that happens while conducting business, and harm to — or theft of — vehicles left in your care at a covered business location.
What kinds of businesses should get garage liability and garage keepers coverages?
Some examples of companies that could benefit from having these types of insurance include:
- Auto repair businesses – Learn more the best business insurance companies for auto repair businesses
- Auto body shops
- Car washes
- Tire shops
- Tow truck operators – Learn more at the best tow truck insurance companies
- Oil change stations
- Auto parts stores.
Am I required to get garage liability or garage keepers insurance?
Neither coverage is required if you own your business and its property outright. However, if you lease your business space, your landlord will likely require you to get garage liability insurance. That’s because they don’t want to be held liable if someone becomes injured on a property they own, and they sue for medical expenses and damages.
Even if you aren’t required to have these coverages, it’s still a good idea to purchase them. If you don’t have adequate garage liability or garage keepers protection, you leave yourself vulnerable if a visitor to your business location becomes injured, you damage other people’s property while conducting business, or a vehicle in your care is damaged or stolen.
In most cases, medical, repair, replacement, legal, and settlement costs related to these incidents could be enough to put most automotive operations out of business.
What other coverages do automotive businesses need?
Here are some coverages automotive business owners often purchase and why they get them.
Business property insurance
Commercial property insurance covers your location and the property contained in it if a fire, natural disaster, or weather event causes harm to it or you experience a burglary or episode of vandalism. Learn more at the best commercial property insurance companies.
Commercial auto insurance
Commercial auto insurance covers vehicles used for business purposes, including tow trucks and pickup trucks. If You use your car or truck for business purposes, you need to have commercial auto insurance or commercial truck insurance. Learn more at the best commercial auto insurance companies and the best commercial truck insurance companies.
On-hook towing insurance covers damage that happens to cars when you tow them.
Note: You may be required to purchase liability insurance and on-hook towing protection to obtain garage keepers liability coverage.
Business income insurance
Business income interruption insurance helps recover some of your lost income if you can’t operate your business for reasons covered by your insurance. Learn more at the best business income interruption insurance companies.
You can combine business income interruption coverage with your BOP policy. BOP policy is a bundled policy combining general liability and commercial property coverages for small businesses with less than $10M in revenue or 100 employees.
Workers’ compensation insurance
Workers comp insurance provides benefits to employees injured or who become ill because of work-related reasons. This coverage is required in all 50 states, except Texas, if you have full-time employees. If you hire independent contractors, you are not required to provide them with workers comp insurance. But to protect them from injuries at work, you should provide them with occupational accident insurance, which is similar to workers comp insurance, yet much cheaper.
There are many more types of protection your business may need. An experienced business insurance agent or company representative can advise you on what coverage is right for you. It’s also likely that an online quoting system will help you identify the coverages your business should apply for.
How much does garage keepers insurance cost?
The average cost of garage keepers insurance is $1,000 to $1,300 a year. Some businesses may pay as little as $500 a year and some other businesses may need to pay as much as $2,500 a year. It depends on many factors, including:
- The type of work your business does
- Coverages and limits
- Claims history
- Types and value of vehicles covered
- The insurer
- Number of locations
- Where your operation is located
- And more.
It’s essential to get several quotes for garage liability, garage keepers, and other related insurance online or through an agent and compare them to ensure you’re getting complete coverage for your automotive business at a fair price. Working with a broker like Simply Business, CoverWallet, commercialinsurance.net, or Smart Financial is a good way to compare several quotes easily.
Learn more at how much garage keepers insurance costs