Liability Insurance: Auto Repair Shop's Best Friend

Auto repair shops face a unique set of risks and challenges, from slips and falls to accidents with power tools and specialised machinery. A single accident or incident of faulty repair work can result in a lawsuit that damages the financial health of the business. General liability insurance is a type of insurance coverage that protects auto repair shops from common business risks and financial losses due to accidents, damage, and liability claims. It covers customer injuries, customer property damage, and advertising injuries, helping to pay for medical bills, vehicle repairs, and legal expenses.

Customer injuries

Auto repair shops need insurance to protect themselves from financial losses due to accidents, damages, or lawsuits. Without insurance, a single incident could potentially bankrupt the business.

General liability insurance covers common business risks like customer injuries, customer property damage, and advertising injuries. It protects your small business from the high costs of lawsuits and helps you qualify for leases and contracts.

From gas stations to repair shops, automotive businesses face a high risk of customer injuries and property damage. A visitor could slip on the floor of a repair shop, or a mechanic could accidentally damage a customer's car while moving it.

General liability insurance can help pay for an injured customer's medical bills or the cost of repairing a damaged vehicle, plus expenses from a related lawsuit. It can also cover court-ordered judgments and funeral expenses in fatal incidents.

In addition to general liability insurance, auto repair shops may also need the following types of insurance:

• Commercial auto insurance: This covers costs after an accident involving a business's vehicle.
• Workers' compensation insurance: This covers medical expenses for work-related injuries and illnesses.
• Cyber liability insurance: This helps businesses recover from cyberattacks and data breaches.
• Commercial umbrella insurance: This boosts the limits on other liability policies, such as general liability and employer's liability insurance.
• Garage keepers insurance: This covers damage or theft of a customer's vehicle while it is in the business's care.

By having the appropriate insurance coverage, auto repair shops can protect themselves from financial risks and legal liabilities, ensuring their long-term success.

Property damage

Auto repair shops face a high risk of customer injuries and property damage. General liability insurance for auto services covers common business risks like customer injuries, customer property damage, and advertising injuries. It protects small businesses from the high costs of lawsuits and helps them qualify for leases and contracts.

General liability insurance provides coverage when a customer’s vehicle or other property is damaged. For example, if a mechanic accidentally damages a customer’s car while moving it or if a car wash malfunctions and breaks a side mirror off a customer's car, general liability insurance can help pay for repairs. This policy can also cover legal expenses if a customer sues to recoup costs.

Additionally, general liability insurance can cover property damage caused by a business's operations. For instance, if a mechanic test-drives a customer’s car and hits another vehicle, the insurance will cover the damage to the other vehicle. However, it's important to note that the customer’s car is not typically covered under general liability insurance. For that, auto repair shops may need separate garagekeepers insurance, which covers damage to vehicles in the business's care, custody, or control.

Garagekeepers insurance is specifically designed for auto shops that offer storage, maintenance, or repair services for vehicles. It protects the business owner from damages to customers' vehicles while they are in the shop's possession. This type of insurance may be required for auto repair shops to operate legally in certain states.

Overall, general liability insurance is crucial for auto repair shops to protect themselves from the financial burden of property damage claims and lawsuits. It provides peace of mind and helps them continue operating their business even in the face of unexpected events.

Advertising injuries

Additionally, advertising injury coverage can protect your auto repair shop from claims of slander, libel, and copyright infringement. These types of claims can arise if you inadvertently copy a logo or slogan from another company in your advertising campaigns. General liability insurance will cover the defence costs and settlements associated with these types of claims.

It's important to note that general liability insurance for auto repair shops also covers other areas, such as customer injuries, property damage, and completed operations. This type of insurance provides an extra layer of protection for your business and can help you qualify for leases and contracts.

Employee injuries

Auto repair shops can be dangerous places for employees, with heavy machinery, power tools, and hazardous materials all presenting risks. In 2019, there were over 16,000 workplace injuries in the auto repair and maintenance industry in the US.

If an employee is injured on the job, workers' compensation insurance can cover their medical expenses and lost wages. Almost every state requires businesses with employees to have workers' compensation insurance. This insurance can also cover illnesses developed as a result of working in the auto repair shop.

Workers' compensation insurance gives employees benefits to help them recover from work-related injuries or illnesses. Employees can access over 1 million providers and 65,000 pharmacy locations across the country.

In addition to workers' compensation insurance, there are other types of insurance that can protect employees of auto repair shops. For example, medical payments coverage can cover medical expenses related to injuries sustained on the premises of the auto repair shop, whether the shop is owned or leased.

Employee dishonesty policies can also protect the business. If an employee steals from the auto repair shop, the business can recover damages under this policy.

Business interruption

The need for business interruption insurance is underscored by the unique risks faced by auto repair shops. These businesses rely on specialized equipment and machinery, which, if damaged or stolen, could halt operations. Additionally, the nature of the work carried out in auto repair shops—using power tools and handling heavy machinery—puts employees at risk of injuries that may lead to absences and impact the business's ability to function.

Furthermore, auto repair shops are susceptible to customer injuries and property damage claims. A customer could slip and fall on the premises, or a mechanic could accidentally damage a customer's vehicle. Business interruption insurance, as part of a comprehensive BOP, helps address these risks by providing coverage for lost income during the recovery period.

The cost and extent of business interruption insurance can vary depending on the specific needs of the auto repair shop. It is generally tailored to the location, size, payroll, sales, and experience of the business. By working with an insurance agent, auto repair shops can ensure they have the right level of coverage to protect their operations and income in the event of an unforeseen disruption.

Frequently asked questions