As the owner of an auto service business, you play an essential role as an adviser by providing customers with options for needed service or maintenance on their automobiles.
What would happen if any of your auto service tools and equipment was damaged in a fire? What if an injury occurred to one of your employees on the job or one of your customers fell in your parking lot? Does your insurance sufficiently cover the unique risks you face?
Your small business can be safeguarded against the risks of the auto industry through garage insurance, garage liability insurance, garage keeper’s legal liability insurance, customer injury, or damage to a customer’s property. Having the appropriate insurance gives you peace of mind and financial protection in the event of a crisis.
Recommended insurance for auto service companies
Garage liability insurance
Instead of General Liability for an auto service business, a special policy is designed specifically for your business operations called Garage liability. Garage liability insurance is necessary for any type of auto repair and service business. It protects your garage from the substantial costs of bodily injury and property damage third-party liability claims and lawsuits when your shop is liable.
The policy provides coverage for third-party:
- Bodily injury
- Premises property damage
- Non-Owned auto (vehicles left for service) liability
- Advertising injuries, such as slander
- Personal injury (wrongful arrest, invasion of privacy)
Coverage provided by Garage Liability Insurance for Auto Service Companies:
Third-party bodily injury
A customer may slip and fall because of spilled coffee on the floor, hurting themselves in your waiting room. They may break a bone, and require emergency transport, x-rays or MRI to determine the damage and of course the cast and any other related equipment. Because coffee had been spilled and not immediately cleaned up, or marked with a wet floor sign, the shop may very well be liable for the injury. If liable, the shop would need to pay the cost of all medical care, pain and suffering as well as the economic loss of the injured party.
Third-party property damage
Garage liability insurance typically provides reimbursement if a client's property is damaged (not vehicles left for service). This coverage may also provide legal defense if you're sued by a client to recover the costs. For instance, if you operate a car wash and it malfunctions and breaks a side mirror off a client's car, your garage liability coverage may cover the damages.
Copyright infringement and other advertising injuries
For instance, if an employee writes a negative review about a competitor's auto repair shop and your business is the subject of a lawsuit, general liability insurance can help you pay your legal fees.
While making an advertising campaign for your store or garage, you may copy a logo or slogan you saw elsewhere without even realizing it.
This is the coverage that business owners need for their public relations strategies or to advertise their automotive business' services using social media.
- Defamation, such as libel (written) and slander (spoken)
- Accidental copyright infringement
Garage Keepers Legal Liability Insurance
Garage Keepers Legal Liability coverage insures your business for physical damage to the vehicles left with you for service or repair. Your shop or its employees would need to be liable for any damage to a customer’s vehicle for this coverage to pay the claim.
For example, your mechanic finishes repair on a customer’s car and takes it for a test drive to assure that everything is working properly. He misses the stop sign at the corner and gets t-boned by a pickup truck. Your driver is cited for the accident. Garage Keepers Legal Liability would pay for the repairs or replacement of the customer’s vehicle, less the deductible.
While the legal liability of your shop is required for the above claim to be paid, there is another type of Garage Keepers coverage that will pay for loss or damage to the customer’s vehicle regardless of fault (liability). This is typically called Garage Keepers Direct Liability.
Garage Keepers Direct Liability pays for loss or damage to a customer’s vehicle even if your shop is not at fault. Let’s say you received a vehicle for repairs to be done the next day. The high-end vehicle is stored in your well-lit, fenced-in lot. During the night, the car is broken into and stolen. With Garage Keepers Legal Liability, the theft of the customer’s car would not be paid for because it was not your business’s fault that a thief broke into your lot, and stole the car. With Garage Keepers Direct Liability, the car theft claim would be paid.
Workers’ Compensation Insurance
Workers' compensation insurance pertains to employee medical care and lost wages caused by work-related injuries. In most states, this policy is required for businesses with a certain number of employees.
Despite all your efforts, it is difficult to protect your employees from being hurt on the job. From sustaining a slip and fall in the repair shop to suffering a brain injury while test driving a car left for service, accidents are bound to happen.
Workers' compensation pays for:
- Expenditures for an ambulance, diagnostics, and medical treatment
- Rehabilitation costs for ongoing physical therapy
- Rehabilitation costs for ongoing physical therapy
Having Technology Insurance If You Work at Home
Even if you spend most of your day working from the comfort of your home, having professional and general liability insurance is critical to running your technology business. Getting the proper coverage can help you avoid paying the costs of customer claims that could put you out of business. Whether you're an independent contractor or own a business, ensure you are protected.
Usually included with workers' compensation, Employers Liability Insurance protects the employer if they are sued by an employee for negligence in causing the employee to be injured. The Workers Compensation insurance company will provide legal defense for the employer and any awarded compensation for covered claims.
An expensive lawsuit resulting from an employee’s frivolous lawsuit may cost tens of thousands of dollars out of pocket to defend. Employer's liability insurance provides defense but is limited by the limit purchased on the policy.
Commercial Property Insurance
Business Property includes:
- Auto repair and servicing tools, equipment, and machinery
- Gas pumps, car washes, and other specialized equipment
- Office furniture and fixtures
- Your building if you own it
Business property insurance will compensate you if your property is damaged or lost due to a covered peril. A special form property policy will cover your business property for things like fire, windstorm, theft, hail, riot, vandalism, and more.
If your enterprise is unable to operate because of covered damage to your building, it could cause financial difficulty. Business interruption insurance will replace your net income while your building is being repaired until you can reopen. With this coverage, you can meet your ongoing financial responsibilities.
Cost of auto service business insurance
Several variables will impact insurance premiums, such as:
- If your business owns autos, tow trucks, etc.
- Automotive services offered
- Insured values of owned assets