The Right Auto Repair Shop Insurance: Finding Guide

Auto repair shops need business insurance to protect themselves from unique risks. Working on cars and using power tools and specialized machinery can be dangerous, and accidents can happen. Business insurance can give auto repair shop owners the confidence they need to run their business. There are several types of insurance coverage that auto repair shops need, including worker's compensation, garage keeper's insurance, general liability insurance, commercial property insurance, loss of income insurance, and commercial auto insurance.

Worker's compensation

Workers' compensation insurance is a crucial aspect of running an auto repair shop, as it protects your employees and, to some extent, your business. Here are the key details you need to know about workers' compensation for your auto repair shop:

Why You Need Workers' Compensation

Working in an auto repair shop comes with various risks and hazards. Employees work with heavy equipment, dangerous tools, and moving vehicles daily. Sharp equipment, high levels of heat, and oil slicks on the floor can lead to accidents and injuries. Additionally, employees can get hurt lifting heavy parts or working with hot metal and chemicals.

What Workers' Compensation Covers

Workers' compensation insurance provides financial protection for your employees and your business in the event of work-related injuries or illnesses. It covers medical costs, including ambulance rides and ongoing physical rehabilitation, and partial lost wages while the employee is recovering and unable to work. It also includes employer's liability insurance, which protects your business if an employee decides to sue over an injury. This coverage is especially important as a single injury can be financially devastating for a small business.

Legal Requirements

Workers' compensation insurance is required by law in most states for businesses with employees. The specific requirements may vary depending on the state and the number of employees. For example, in New York, gas stations must carry workers' compensation insurance for all employees, including part-time workers, while in Alabama, gas stations are only required to have this insurance when they employ five or more people.

Cost of Workers' Compensation

The cost of workers' compensation insurance is typically based on your business's payroll. The rate is calculated per $100 of payroll and takes into account factors such as the type of work done by employees, your experience modification rate (claims history), and the state you are in. On average, auto repair shops pay around $1.29 per $100 of payroll for workers' compensation insurance.

Ways to Save on Workers' Compensation

There are a few strategies to reduce the cost of workers' compensation insurance for your auto repair shop:

• Compare Quotes: Shop around and get quotes from multiple insurance companies to find the best rates.
• Dividend Programs: Some insurance companies offer dividend programs that reward businesses for controlling losses. These programs may provide a dividend at the end of the policy period or an upfront discount on your policy.
• Safety Plans: Implementing safety plans and smart work habits can help reduce the likelihood of injuries and accidents, leading to lower insurance rates.
• Drug-Free Workplace Programs: Insurance companies may offer discounts if you have a drug-free workplace program in place, as it can help reduce accidents and improve employee alertness.
• Eligible Discounts: Review your policy regularly to ensure you are taking advantage of all eligible discounts, such as scheduled credits.

By understanding the importance of workers' compensation insurance and its key aspects, you can make informed decisions to protect your employees and your auto repair shop business.

Garage keeper's insurance

Garage keepers insurance is a type of specialty policy that auto businesses use to protect their customers' vehicles from being damaged while in their care. This type of insurance is also referred to as storage location insurance in some states, such as Texas and Virginia. Garage keepers insurance covers vehicles that are being stored or serviced by the business, including during test drives.

There are several types of garage keepers insurance coverage:

• Legal liability coverage: This is the most common type of garage keepers insurance. It covers losses when an employee is legally liable for damage to a customer's vehicle, whether from negligence or mistake.
• Direct primary coverage: This type of coverage protects the customer's vehicle regardless of who is at fault.
• Direct excess coverage: A cheaper alternative to direct primary coverage, direct excess coverage acts as a secondary policy and only applies to claims for which the business is not legally at fault.

Garage keepers insurance is important for businesses that regularly take custody of customer vehicles, such as electronics installers, oil change services, parking garages, and auto repair shops. It helps to reduce financial risk and protect the business in the event of vehicle damage or theft.

General liability insurance

As an auto repair shop owner, you face unique challenges and risks. With general liability insurance, you can protect your business from claims related to bodily injury and property damage caused to someone else's belongings. This type of insurance is particularly important for auto repair shops as they operate in a high-risk environment where customer injuries and property damage are common.

Small automotive businesses may benefit from bundling general liability insurance with commercial property insurance in a Business Owner's Policy (BOP). A BOP typically costs less than purchasing each policy separately and is suitable for businesses with fewer than 100 employees, a small office or shop, annual revenue of less than $1 million, and operating in a low-risk industry.

Commercial property insurance

For example, if your tools are stolen, commercial property insurance will help cover the costs of replacing them. This type of insurance also covers damage to your property caused by events such as fires, explosions, burst pipes, storms, theft, and vandalism.

The cost of commercial property insurance depends on the value of the assets being insured. The more assets covered under the policy, the higher the premium will be. It is also worth noting that some states, such as California, have mandatory insurance requirements for auto repair businesses.

Loss of income insurance

When searching for auto repair shop insurance, it's important to consider the unique risks associated with running this type of business. One way to protect your business is by investing in loss of income insurance, which can provide coverage for both you and your team in the event of an emergency.

When considering loss of income insurance, it's important to review the specific criteria and ensure that it aligns with your business needs. This type of insurance can provide peace of mind and financial protection for your auto repair shop in the event of unexpected circumstances.

In addition to loss of income insurance, there are several other types of insurance that auto repair shops should consider, including worker's compensation, garage keeper's insurance, general liability insurance, commercial property insurance, and commercial auto insurance. These insurance policies can help protect your business, your employees, and your customers in the event of accidents, injuries, property damage, or other unforeseen events.

It's recommended to consult with multiple insurance providers and get quotes to find the best coverage for your auto repair shop's specific needs.

Frequently asked questions