Auto Repair Shop Insurance: Navigating The Legal Maze

Auto repair shops face a variety of risks, from accidents and injuries to theft and property damage. As such, it is important for them to maintain insurance to protect their finances and assets. While the specific requirements may vary by state, there are several types of insurance that auto repair shops typically need, including worker's compensation, garage keeper's insurance, general liability insurance, commercial property insurance, and commercial auto insurance. These policies can help cover the costs of accidents, repairs, and legal fees, providing peace of mind and financial protection for the business.

Garage liability insurance

For example, if a customer slips on a freshly mopped floor in the waiting area and breaks their leg, they could sue the business for their hospital bills and other expenses. In this case, garage liability insurance would cover the business's legal and medical expenses.

It is important to note that damage to a customer's vehicle is not typically covered under garage liability insurance. Instead, a separate garage keepers liability policy is required for this type of claim. Additionally, garage liability insurance does not cover damage to or theft of the insured business's property, such as equipment, tools, or the building itself. It also does not cover vehicles owned or operated by the business or its employees. Employee injuries and illnesses are excluded from garage liability insurance and would typically be covered under workers' compensation insurance.

The cost of garage liability insurance may vary depending on factors such as past claims history, the amount of coverage, and the types of services offered by the auto repair shop. It is recommended that automotive business owners assess their specific needs and risks before purchasing garage liability insurance to ensure they have adequate coverage.

Business property insurance

For example, if a truck rolls off a lift and damages your shop, business property insurance can help with the repair and replacement costs. It can also protect your equipment against breakdowns.

The cost of business property insurance varies depending on the state and the number of assets covered under the policy. It's worth noting that California requires auto repair businesses to have some form of insurance as part of consumer protection law.

When choosing business property insurance, it's important to understand the risks your business may face and select a policy that covers those risks. It's also a good idea to get multiple quotes from different vendors and bargain to get the best rate.

Worker's compensation

Workers' compensation insurance is critical for auto repair shops. This type of insurance provides financial protection for both employees and employers in the event of work-related injuries or illnesses. It covers medical costs, lost wages, and other expenses related to job-related accidents or illnesses.

The Workers' Compensation Board defines workers' compensation as "insurance that provides cash benefits and/or medical care for workers who are injured or become ill as a direct result of their job." This coverage is essential for auto repair shops as the nature of the work involves various hazards, including heavy equipment, moving vehicles, dangerous tools, sharp pieces of equipment, high levels of heat, and slick floors. These hazards put employees at risk of injuries such as burns, slips, falls, and being struck by vehicles.

Workers' compensation insurance helps cover medical expenses for employees injured on the job, including ambulance rides, physical rehabilitation, and ongoing medical care. It also provides partial wage replacement during the employee's recovery period. Additionally, it offers protection to employers if an employee decides to sue over an injury. While employer's liability insurance is included in workers' compensation, it has limits on how much it will pay out for a lawsuit.

The cost of workers' compensation insurance for auto repair shops varies depending on factors such as the state, the number of employees, the type of repair work, and the business's claims history. On average, businesses pay around $1.29 per $100 of payroll for workers' compensation insurance.

It is important to note that workers' compensation insurance does not cover all scenarios. For example, it does not protect employers or employees from legal liability if the injury resulted from a violation of the law, drug or alcohol use, or clear company policy violations.

Garage keeper's insurance

Garage keepers insurance is a type of specialty policy that auto repair shops can use to protect their customers' vehicles while they are in their care. This type of insurance is also known as storage location insurance in some states, such as Virginia and Texas. Garage keepers insurance covers vehicles that are being stored or serviced by the auto repair shop, protecting them from damage or theft. It is designed for businesses that offer towing services or operate service stations, and it is an optional coverage.

There are three primary coverage options for garage keepers insurance: legal liability coverage, direct primary coverage, and direct excess coverage. Legal liability coverage is the most common type and it only covers losses when an employee is legally liable for the damage to the customer's vehicle. Direct primary coverage protects the customer's vehicle regardless of who is at fault, while direct excess coverage is a cheaper alternative that only applies if the insured is not at fault.

The cost of garage keepers insurance will depend on several factors, including the type and location of the business, the types and number of vehicles typically on-site, and the chosen coverage limits and deductibles.

Garage keepers insurance is an important type of coverage for auto repair shops to have as it provides financial protection and reduces their risk exposure. Without it, auto repair shops could be liable for any damage or theft that occurs to their customers' vehicles while in their care.

General liability insurance

Auto repair shops face a high risk of customer injuries and property damage. A customer could slip on a wet floor in the waiting area, or a mechanic could accidentally damage a customer's car while moving it. General liability insurance is a crucial protection for auto repair shops against such common risks.

Additionally, general liability insurance provides coverage for customer property damage. If a mechanic accidentally damages a customer's car, this type of insurance can help cover the cost of repairs. It can also cover legal expenses if a customer sues to recoup costs. Advertising injuries, such as accidental copyright infringement or defamation, are also covered by general liability insurance.

Frequently asked questions