Auto service technicians, mechanics, and auto repair shop owners help us keep our wheels on the road. 

From running diagnostic tests to repairing and installing the various components in our vehicles, a meticulous, trustworthy auto mechanic can ease stress and limit maintenance costs when something goes wrong or prevent a minor issue with your car, pickup, van, or SUV from becoming a significant one. 

But auto maintenance and repair professionals face many risks when servicing their customers’ vehicles. A comprehensive auto repair shop insurance policy is essential for protecting your reputation, finances, and business.

An auto technician working on a vehicle.

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Zensurance - Small Business Insurance Guide

What Risks Do Auto Repair and Body Shops Face?

Auto repair shop owners and their employees face a wide range of liabilities that can trigger injuries and damages, including risks to their equipment and shops. Among the most common hazards they face are:

Fire

Fire poses one of the greatest risks to any auto repair shop. The threat of fire is ever-present with all the equipment usually found in any collision repair or auto repair garage – welding tools, industrial machinery, steel-cutting tools – and flammable liquids and chemicals in the shop and vehicles.

Third-party injuries and property damage

One of your customers may be injured on your property, or their vehicle may be damaged while in your care, custody, and control. Furthermore, if an auto service technician makes a mistake and doesn’t correctly repair a customer’s car, causing them to get into a collision, you could be held liable.

Employee injuries

An auto repair shop’s employees run the risk of injury too. Mechanics regularly work with dangerous equipment, including winches, hydraulic rotary vehicle lifts, and compressors. There’s also the danger of an employee slipping and falling or suffering a severe burn or laceration.

Theft and vandalism

Vehicle theft in Canada is on the rise. Auto theft is up by an estimated 44.8% in Toronto alone in 2022 compared to 2021. Furthermore, according to the Canadian Border Services Agency, motor vehicle theft was the second most common reported crime, with 1,020 stolen vehicles seized in 2021, up from 816 in 2020. Auto repair shops are prime targets for car thieves as several vehicles are typically parked on their premises. However, theft isn’t limited to cars. Criminals target repair shops for their expensive tools. Moreover, vandalism is also a threat to auto repair shop owners.

Floods and water damage

The possibility of any commercial property suffering water damage from a burst pipe or flooding because of heavy rainfall and extreme weather is always a threat. Auto repair shops are not immune to these risks. The Insurance Bureau of Canada notes severe weather in 2022 was the third most expensive year in insurance claims, reaching $3.1 billion in losses.

Equipment malfunctions

Every auto repair shop’s intricate and expensive equipment can break down unexpectedly because of an electrical or mechanical malfunction. So can a repair facility’s HVAC system and other appliances on-site.

Pollution

The possibility of oil and gas leaks and other toxins harming the environment and nearby properties poses a potential lawsuit risk or civic fines to auto repair shops. Even accidental leaks or the buildup of minor spills over time can trigger legal action against you.

Cyber-attacks

Unfortunately, cyber-attacks are increasingly common for all small businesses. From data breaches to phishing and ransomware attacks, no business is immune from cybercrime’s threat. Like any other business, auto repair shops have websites, use email and online or software reservation systems. That puts them in a hacker’s crosshairs.

How Can Business Insurance Minimize the Risks Auto Repair Shops Face?

A customized auto repair shop insurance policy can help your business recover if you suffer damage or loss or are facing a third-party lawsuit. Among the coverages this type of policy typically includes are:

  • General liability: covers daily operations in your shop for third-party bodily injury or property damage claims.
  • Garage liability: Protects the vehicles in your care, custody, and control and coverage for when your employees need to test drive a customer’s vehicle.
  • Garage keepers liability: This coverage protects customer vehicles stored on your premises while technicians are servicing them if damaged by fire, theft, vandalism, or severe weather.
  • Commercial auto: If your shop owns a vehicle, private-passenger car insurance isn’t designed to protect it. Commercial auto insurance will
  • Commercial property: Commercial property insurance covers your shop, its furnishings and contents (including electronics and office equipment), and inventory against water damage, fire, theft, and vandalism. It typically includes business interruption insurance to cover overhead costs following an insurable loss.
  • Tools and equipment: If your valuable tools and equipment are lost, stolen, or damaged, tools and equipment insurance pays to repair or replace them.
  • Non-owned auto liability: If your employees use their vehicles to run business-related errands like picking up needed supplies and parts, this coverage helps pay for damages if they’re involved in a car accident.
  • Professional liability: Your advice and service are trusted by your customers. But if you or your employees make a mistake or fail to perform a service as promised, professional liability coverage can help mitigate the costs of a third-party lawsuit.
  • Pollution liability: Provides financial support for clean-up costs, damages to customer vehicles, or third-party bodily injuries resulting from pollution and toxic substances.
  • Employers’ liability: Helps shop owners complement provincial workers’ compensation insurance by protecting them from costs associated with injuries to their employees.
  • Commercial crime: Internal theft is common across industries and companies. Commercial crime insurance covers business owners for employee theft, including fraud and forgery.
  • Cyber liability: Support if a cyber-attack or data breach compromises your computing systems and software.

You may need to add other coverages to your customized policy. Speak to a Zensurance licensed broker if you have questions about what your policy should contain or understand what your policy’s coverage limits, deductibles, and exclusions may be.

How to Get Low-Cost Auto Repair Shop Insurance

Getting the customized auto repair shop insurance policy you need to protect your assets through Zensurance takes significantly less time than it does to perform an oil change.

Fill out our online application for a free quote. Let our friendly brokers shop our partner network of over 50 insurance providers to get you the low-cost protection you need so you can focus on keeping your customers’ vehicles humming.

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About the Author: Joe Sarraino

Joe Sarraino is a Team Lead, Contractors, at Zensurance.