Vehicle owners love their wheels for personal, emotional, and practical reasons. They provide a sense of independence and freedom, our vehicles are often associated with personal memories, and they’re essential for commuting and daily activities.

So, when a customer visits your automotive shop and entrusts their car, SUV, or truck to you for service or repair, they expect you to treat their vehicle with care. No doubt you do, but that doesn’t mean accidents or mistakes won’t happen. That is why garage policies for repair shops are vital for protecting the finances of automotive-related businesses. 

A garage liability insurance policy covers general liability risks associated with your operations and premises and damages to your customers’ vehicles while in your possession.

Let’s review what this type of policy features and the liability risks automotive businesses who need it face.

Mechanic working in an auto garage

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What Types of Businesses Need Automotive Garage Insurance?

There is a broad range of businesses that require an automotive garage liability insurance policy, including:

  • Automotive repair shops
  • Auto detailers and mobile auto detailing shops
  • Collision body shops
  • Lube, oil and filter shops
  • New and used car dealerships
  • Transmission repair facilities
  • Glass and windshield repair shops
  • Muffler repair garages
  • Car washes
  • Vehicle painting facilities
  • Parking garages and lots

What Liability Risks Do Automotive Garage Businesses Face?

All automotive businesses face liability risks that can threaten their finances. The most common risks are:

  • Third-Party Property Damage

Working with a customer’s vehicle can lead to mistakes or mishaps that damage it. Whenever a customer vehicle is in your ‘care, custody, and control ‘, you are legally and financially responsible for its welfare. This responsibility extends to when the car being worked on is inside your shop, being test-driven by an employee, or parked outside on your lot. 

  • First-Party Property Damage

Your garage, office, and business contents (electronics, furniture, equipment, inventory) could be damaged or destroyed by fire, water, a natural disaster, theft, or vandalism. 

  • Third-Party Bodily Injuries

One of your customers could be injured on your business premises and require medical attention. For example, they could slip and fall on a wet or slick floor in the customer lobby or inside the garage. You may be liable to pay for their medical and rehabilitation injuries.

  • Faulty Repairs and Services

A faulty repair or inadequate service on a vehicle could lead to a mechanical malfunction later, or worse, an accident when the owner is driving. You may face allegations of professional negligence or be sued if that occurs.

  • Storage Liabilities

Storing customer vehicles on your premises while they await repair or after being repaired and the customer has yet to pick their car up also poses risks. If that vehicle is stolen, vandalized, or damaged while in your possession, you can be liable for the costs.

  • Pollution Liabilities

All automotive businesses use oil, lubricants, solvents and other toxic substances. If mishandled or improperly stored or disposed of, these hazardous materials can damage the environment on and around your garage. That can lead to fines and potential lawsuits.

  • Cyber Incidents

Safeguarding your customers’ digital personal and financial information is critical. If a hacker compromises your cloud storage or point-of-sale (POS) systems, your email account is infiltrated by malware, or your business suffers a cyber-attack or data breach that exposes confidential data, you can be sued for damages.

What Does an Automotive Garage Liability Insurance Include?

A comprehensive garage liability insurance doesn’t just cover damages to customer vehicles in your care, custody, and control. It also includes a range of other coverages to protect your property from the risks that automotive businesses may face, including:

  • Garage liability insurance, or garage keepers insurance, covers a wide range of damages to customer vehicles in your care, custody, and control. This can include damages from accidents, theft, fire, vandalism, and natural disasters.
  • General liability insurance covers third-party bodily injury and third-party property damage claims, such as customer injuries or vehicle damage. It may also include product liability insurance to cover any products you manufacture, distribute, or sell to customers. You can add it to your policy if it’s not automatically included.
  • Garage tool insurance covers repairing or replacing lost or damaged equipment and tools, accessories, or other property you rent or borrow in your care.
  • Pollution liability insurance covers third-party bodily injury, property damage, and environmental damage due to gradual and sudden pollution events. 
  • Commercial crime insurance addresses claims involving employee theft, including any losses resulting from forgery or fraud. It also covers losses sustained due to a robbery or break-in by unknown persons. 

When exploring your insurance options, consider things about your business and industry to understand your needs better. You can always talk to a Zensurance broker if you have questions about what your policy should contain.

How to Get Low-Cost Automotive Garage Liability Insurance

Zensurance is Canada’s leading small business insurance brokerage that’s trusted by thousands of Canadian small businesses and independent professionals across hundreds of industries. Let us worry about getting your garage liability insurance coverage.

Start by filling out our online application for a free quote (it only takes a few minutes). Our licensed brokers will handle the rest, shopping our partner network of over 50 insurance providers to get the low-cost solution you require and customize it to your specifications. With Zensurance, getting the right insurance for your automotive business is easy and hassle-free.

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About the Author: Yassin Elsayed

Yassin Elsayed is a Team Lead, Contractors at Zensurance.