Garage Insurance: Liability, Programs, Costs & More

The businesses that require the protection of Garage Insurance programs are diverse. The automotive industry statistics, including auto and auto parts stores, indicate that its sales are 20 percent of total US retail sales. The sector's volume makes it the largest in the US. Its sales account for up to 3.5 percent of the entire Gross Domestic Product (GDP).

Published on August 18, 2021

garage liability
Car Sales. Automobile Seller Woman Showing Auto To African Businessman Standing In Dealership Showroom. Free Space

What is Garage Insurance & Who Needs It?

Garage Insurance is a synonymous term with Garage Liability. It is specialty insurance designed to protect against property damage and bodily injury claims in automotive industry companies. The coverage is integral to the package of coverages found in Garage Insurance Programs. 

Adding garage liability insurance to their business liability coverage is recommended for these automotive industry business categories: 

  • Automobile Dealers and Non-Dealers

  • Parking Garages and Parking Lots 

  • Tow-Truck Operators

  • Service Stations

  • Customization Shops 

  • Repair Shops and Service Stations

  • Valet Services

  • Dealers Open Lot

  • Motorcycle Dealers and Repair

  • Driveway Contractors

How Does Garage Insurance Work? 

Garage Liability is umbrella insurance that protects against bodily injury and property damage risks excluded from a standard commercial general liability policy. Automotive industry businesses need the supplementary protection of garage retail insurance coverage to protect their operations from exposure to losses and potential catastrophic claims against them. 

Garage liability insurance covers claims of harm from non-employees caused by incidents occurring in a garage's operations. The primary coverages include: 

  • Bodily injury pays the medical bills when a non-employee suffers an injury while on the shop's premises. 

  • Property damage covers repairs to a customer's vehicle when it is damaged while in the shop. 

  • Products and completed operations pay medical and repair bills when a customer is injured or their vehicle is damaged due to the actions of shop employees. For example, a mechanic forgets to add fluid to a pump for power steering, leading to an accident. 

Garage liability insurance covers the named insured, whether a person or a business named on the policy. It extends to protect the employees, partners, directors, and shareholders as they perform their duties on behalf of the named insured.

Garage Insurance vs. Garage-Keepers Insurance

Fundamental garage risk management requires both Garage retail insurance and Garage-Keepers insurance coverages. That's because a standard Garage Liability policy only protects third parties and their property when injured or damaged in an accident caused by an employee.

When vehicles are in the "care, custody or control" of an automotive repair shop, Garage-keeper's insurance protects the owners against property damage claims to the cars. It is necessary coverage because it is otherwise excluded from a standard garage liability policy. When vehicles are stored in the garage or on the road driven by employees for such things as testing, shop owners have no coverage without a garage-keeper's policy. The policy limits and deductibles apply per vehicle, meaning instances with damage to multiple cars are possibly costly events.

Other Insurance Policies You Might Need

Automotive dealers, non-dealers, and repair shops are small businesses that require an array of insurance coverages to adequately protect the company and its owners from potentially crippling claims against them. The following list includes the usual policies they need.

Commercial General Liability (CGL)

Coverage includes bodily injury and property damage not directly related to a garage's daily operations.

Professional Liability

While a CGL covers physical risks of bodily injuries or property damage claims, a  Professional Liability policy helps pay expenses for non-physical, abstract risks, for example, legal defense costs due to errors and omissions made by the owner or employees. 

EPLI

Any business with employees needs protection from Employee Practices Liability Insurance. It helps to pay legal defense fees and for certain damages arising from employee allegations, including:

  • Sexual harassment

  • Wrongful termination

  • Discrimination for gender, age, and more

  • Denial of career opportunity

  • Neglectful employee evaluation

  • Willful breach of employment contract

  • Failure to employ or promote

  • Wrongful discipline

  • Infliction of emotional distress

  • Employee benefit plan mismanagement

Business Interruption (BI)

Should a disaster strike an automotive business, coverage from a BI policy kicks in to help pay expenses such as rent, taxes, loan payments, employee salaries, and more during the period it is closed or that its income is cut off. It also covers costs for relocation if physical damage causes the business to move to either a new or temporary site. BI is usually an endorsement or part of a Business Owners Policy (BOP) that rolls several coverages into a single policy to reduce expenses.

Workers' Compensation

Although Workers' Compensation insurance is a legal requirement in most states, the mandates for coverages are different. In general, Workers' Comp covers employees for automotive retail stores and repair shops for injuries or deaths while fulfilling their employment duties.

A Workers' comp policy helps to pay for claims such as: 

  • Missed wages for injured or ill employees who require time off to rehabilitate and recover.

  • Medical expenses to cover treating injured or sick employees.

  • Vocational rehabilitation helps workers who require therapy or other medical care before returning to work.

  • Death benefits, including funeral costs, for employees who die due to a work-related incident.

Commercial Auto 

Commercial Auto insurance protects against lawsuits and claims of third-party property damage and bodily injury caused by the owner or employees in an accident.

Commercial Umbrella 

The other coverages in Garage Insurance Programs come with upper limits that may not adequately protect an automotive business. A Commercial Umbrella policy adds a layer of liability exposure protection to existing underlying policies. It usually is a less expensive option to purchasing additional coverage on individual liability policies. 

  • Property

  • Dealers Open Lot

  • Hired & Non-Owned

  • Special Events

  • E&O-Dealers, Odometer & Title

  • D&O

Garage Insurance Costs (and what factors affect the price)

The costs for a garage liability policy will range between $1,000 to $3,500 annually. It is a higher cost than a CGL policy because of the extra risks facing most garage businesses.

A typical Garage-keeper's Insurance policy costs run between $1,000 - $1,300 annually. Other factors that affect premium include the nature of the business and the type and the average number of vehicles it services daily. Business location, claims history, and years of business experience are additional underwriter considerations.  

Best Garage Insurance Programs

It's natural to seek the best Garage Insurance Programs for your insureds. That's why ProgramBusiness.com built this platform to connect wholesalers, MGAs/MGUs, program administrators, and carriers with independent agents looking to place business. Our goal is to help agents quickly contact and begin the underwriting, quote, and submission process.

When you search for garage insurance programs, a top result is USG Insurance Services. It is a national wholesale broker and managing general agent (MGA) with more than 20 offices. It represents a range of admitted and non-admitted A-rated carriers and writes business in all states. 

Targeted Classes for USG's Garage Program include: 

  • Antique Auto Dealers, Repair & Restoration

  • Auto Auctions 

  • New Auto Dealerships Used Autos Dealerships 

  • Electric Auto Sales or Repair 

  • Golf Cart Dealers & Repair 

  • Wholesale Auto Dealers & Brokers 

  • Auto Repair Shops 

  • Parking Garages 

  • Salvage Yards 

  • Accessories Installation 

  • Airbag Installation & Repair 

  • Glass/Windshield Installation or Repair 

  • Smog & Emissions Control Shops

  • Window Tinting 

  • Tire Sales & Services 

  • Gas Stations* 

  • Auto Body and Paint Shops 

  • Auto Stereo & Alarm Installers 

  • Full-Service Car Washes 

  • Auto Detailers 

  • New Tire Dealers 

  • Mini Markets with Repair Shops 

  • Auto Auctions 

  • Vinyl Wrapping 

  • ATV Repair 

  • Auto Alarm & Stereo Installation 

  • Impound Yards 

  • Towing 

  • Driveaway Radius Extension 

  • Truth & Lending E&O 

  • Federal Odometer Statute E&O 

  • Title E&O 

  • EPLI 

  • D&O 

  • Umbrella/Excess 

  • Special Events Premises Medical Payments 

  • Fire Legal Liability 

*including convenience stores, car washes, repair shops

It Also Has Programs for These Risks:

  • Dealers and Non-Dealers

  • Motorcycle Sales and Repairs

  • Valet Parking

 

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