Garage Liability vs. Garage Keepers Insurance: Which Does Your Auto Shop Need?

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What Is Garage Liability Insurance?

Garage liability insurance is a specialized form of commercial general liability insurance tailored for businesses that operate garages, repair shops, or auto service centres. Even car detailers working from home need garage liability coverage.

Unlike a standard liability policy, garage liability insurance is designed for the unique risks of a business that uses heavy equipment, lifts, tools, and machinery, and is conducting repairs on critical components of automobiles.

It protects your automotive business from third-party bodily injury or property damage claims related to your operations, such as a customer slips on an oil spill in your shop, or a defective part you installed in a customer’s vehicle causes an accident.

It may also include products and completed operations coverage, which protects you if faulty work or an improper installation results in damages or injuries later.

What Is Garage Keepers Insurance?

Garage keepers insurance protects customers’ vehicles while in your care, custody, and control. It applies whether their vehicles are being serviced and repaired, detailed, or parked and stored on your property. 

It may cover fire, theft, vandalism, or damage caused by extreme weather to customer vehicles, as well as accidental damage to a customer’s vehicle caused by your employees while moving or test-driving cars. In short, while garage liability covers your business operations, garage keepers insurance covers the actual vehicles left in your shop.

Do Automotive Small Businesses Need Both Policies?

It’s highly recommended for automotive businesses to have both garage liability insurance and garage keepers insurance because they each cover different types of risks.

Think of it this way: Garage liability insurance protects your automotive small business from expensive claims caused by accidents and third-party bodily injuries that occur on-site or resulting from your shop’s usual operations. For example, a customer falls and is injured after slipping on an oil spill in your shop, or a faulty brake installation on a customer’s car leads to an accident.

Garage keepers insurance covers damages and losses to your customers’ vehicles that are in your care, custody, and control. For example, an employee accidentally damages a customer’s vehicle while test-driving it, or a fire ignites in your garage and damages several customer cars. It also includes third-party liability coverage if an employee test driving a customer’s vehicle gets into an accident and is at-fault for the collision.

Without both types of insurance in your auto shop’s policy, you’re exposed to significant gaps in coverage that could cost you tens of thousands of dollars.

If you run an auto repair shop, service garage, or body shop in Canada, or ever drive customers’ vehicles, garage liability insurance and garage keepers insurance work together to protect both your business and your customers.

Frequently Asked Questions About Garage Liability and Garage Keepers Insurance

Is garage liability insurance the same as garage keepers insurance?

No. Both types of insurance apply to auto businesses, but they cover very different risks. Garage liability covers injuries or damages caused by your operations. Garage keepers cover damage to customer vehicles in your possession.

Are a customer’s belongings inside a vehicle covered by garage keepers insurance?

No. Garage keepers insurance covers the vehicle itself, not personal items inside, like electronics or tools.

What are common exclusions under garage liability insurance?

Exclusions in a garage liability policy may vary, but most policies exclude coverage for intentional damage, employee injuries, and pollution and hazardous substance leaks.

What are common exclusions under garage keepers insurance?

Typical exclusions under garage keepers insurance include customers’ personal property inside a vehicle, open lot theft, racing or illegal use of vehicles, and mechanical or electrical breakdowns in a customer’s vehicle unrelated to negligence.

How to Get Comprehensive Insurance for Your Automotive Small Business Online

Zensurance is Canada’s leading online business insurance brokerage, helping small business owners, independent professionals, and entrepreneurs obtain comprehensive, low-cost coverage entirely online.

Complete our online application for a free quote in less than five minutes.

Let our team of knowledgeable brokers find the right policy to suit your automotive business through our partner network of over 50 insurers, customize it to suit your needs and budget, and issue your policy documents and a certificate of insurance in 48 hours or less.