Expert Strategies & Tips for Buying Garage Keepers Insurance

Garage Liability and Garage Keepers Liability Insurance

In this article, you will learn the difference between Garage Liability and Garage Keepers Liability Insurance.

You will also learn about other types of insurance a garage should consider adding to their overall insurance program.

I will include real life claims examples and recommend specific insurance companies to consider when buying or shopping for insurance on your garage.

I am a licensed insurance agent and I have been helping garage owners buy insurance for over 10 years. 

Garage Insurance is extremely complex and each individual garage owner may have specific insurance needs that may not be addressed in this article.

This article is meant to give general advice and tips on coverage for a automobile repair garage.  

Before making this very important decision, it is recommended that a garage owner speak with several licensed insurance agents and attempt to obtain at least three quotes before committing to the coverage package.

We can help! -- Click here for a free Garage insurance quote!

What is Garage Keepers Insurance?

Garage insurance offers essential coverage for repair shops, auto dealers, garage owners, and many others.

Since garages often contain hundreds of thousands of dollars of equipment, having a garage insurance policy lets you focus on your business while knowing that you’re covered should there be an event like a fire or property damage.

No matter how hard you work to offer a top-level service, accidental faulty work can occur by you or one of your employees.

By having garage keepers insurance, you’ll receive protection from what could otherwise be a business-destroying financial strain.

One of the wonderful benefits of garage insurance is that it’s flexible to cover what you need without unnecessary extras.

So, whether you want coverage for your personal garage or business, you have complete control over tailoring your insurance plan.

Either way, we can help! -- Click here for a free business insurance quote! 

Should a Garage Have Insurance?

It’s vital that any type of garage have insurance so that you’re covered if a customer or an employee gets injured on your property. 

Garage Keepers Liability will cover your customer's vehicles while they are in your possession.   

Do I Need Garage Insurance?

All Garage businesses should carry Garage Liability insurance.  

Coverage packages can be modified to allow for premiums to be lowered.

Policies are sold on an annual term, so coverage can be modified annually.

It’s a good idea to consider purchasing garage keepers liability insurance as a part of your Garage Liability policy.

Should you have expensive vehicles or other valuables in your garage, you could be put out of business by an uninsured loss.  Fire, riot, or theft are all insured by a typical garage insurance policy.

Best Garage Keepers Insurance Companies

What Insurance Does a Garage Need?

At a bare minimum, you should purchase Garage Liability insurance.

Garage Liability will pay claims that are caused by bodily injury or property damage.

It also will pay out on claims that are connected to your work on customer vehicles.

An example would be a recommended repair that is not performed because the customer declines the service.

You note the fact that the customer declined the repair, however, you will still need to defend yourself in court if the deferred repair ultimately causes the customer to be involved in a major accident.  

Travelers and Nationwide are two great companies for Garage Insurance.

However, they only like to insure the typical garage doing work on everday vehicles.

If your garage operation repairs or restores specialty vehicles, you are going to need to shop around for a garage insurance policy with some lesser known insurance companies.  

Many lesser known insurance companies are well financed and able to cover claims, they fly under the radar of the general public because they focus on a niche market.  

Garage Keepers Liability Insurance is another vital part of any garage insurance package.

Garage Keepers covers your customer's vehicles while they are in the possession of the garage.

For example:  a garage specializing in the restoration of old Porsches will need a very high limit of coverage to accommodate the  total insurable value of 5 to 10 vehicles stored inside the shop at any given time.  

What Basic Insurance Should a Startup Garage Have?

The first policy any garage owner should buy is the basic Garage Liability Policy.  

You can usually get a one year policy term for around $2,000 in premium.

Travelers and Nationwide Insurance companies are both well respected and well known.  

We would recommend obtaining a quote from either of them if they are willing to give you a policy.

If you can afford it, you will also want Property Insurance for your tools and equipment.

Most garage owners have over $100,000 in tools and equipment.  It adds up quick, so doing an inventory before shopping for quotes will help you work with an agent to quickly obtain the right coverage.

Garage Keepers Liability Insurance will cover your customer's vehicles while they are in your possession.

When you take their keys, you take the liability of the vehicle.

Before you take a customer car for a test drive, you will need to make sure your covered by Garage Keepers Liability.

Workers Compensation is required before you hire your first assistant.

State employment laws require all employers to carry this policy.  

Workers comp coverage is all the same regardless of the company you use for the insurance, so its important to shop around for quotes.  

landlord's insurance requirements

Unless you are operating out of your home, you will most likely have a landlord who will send you a list of insurance requirements as a part of the lease.

A standard Garage policy will fulfill 99% of the insurance requirements sent to you by the landlord. 

The landlord will require you to provide them with a certificate of insurance, which your agent can provide.

Be sure to send your agent a copy of your lease agreement before you sign, so you know approximately how much insurance will cost.

What Insurance Should an Established Garage Add?

If you have been in business a few years and have established a good client base, it is now time to take a closer look at risk and risk management.

You still want to be mindful of your monthly expenditures, but should consider how an unplanned financial loss could impact your long term prospects of being successful.

Employment practices liability insurance

Garage operations with over 20 employees become very different when compared to a start up with just one or two.  

As an owner, you just aren't as closely involved with the day to day lives of your employees and you can't maintain a personal relationship with all of them.

With this distance comes more risk.  

Risk of lawsuit brought by a current or former employee, alleging wrongful termination, discrimination, or harassment are very common.

Employment Practices Liability insurance is a great way to transfer away the risk of employment related lawsuits.

Most Employment Practices policies also include free HR support for all policyholders.

 Free reference material and access to a Human Resources professional provides a lot of assistance to the mom and pop garage business, who may not understand all of the ways an employee could sue for a slight mistake on the part of management or ownership.

cyber liability insurance

A large garage operation will be dependent on computers to handle accounting and customer data tracking.

If a cyber criminal infiltrates a computer network, he can steal personal information of employees and customers. 

 He can also hold the system hostage until the owner pays a ransom in the form of crypto currency.

This is known as a "ransomware attack" and is very common.

The availability of untraceable cryptocurrency allows cyber criminals a safe way to be paid their ransom demand.

Cyber insurance policies for a medium sized garage will cost around $1,500 to $1,800 a year and potentially save the business from an unplanned ransom demand note of $50,000 to $70,000.

Other Insurances Garage Keeper Companies May Consider?

Virtually every garage will have employees.  

Workers Compensation will pay for medical treatment and lost wages if an employee is injured while working in the garage.

Workers Compensation for garage employees is required by law in almost every state. 

 Rates can vary, so its best to shop around for quotes before deciding on a policy.

If you run a large garage and have many employees, employee dishonesty insurance will cover you should they steal or vandalize your expensive garage equipment.

Additionally, if you store sensitive client data online, having cyber liability will protect you in the event of a data breach.

Common Insurance Claims Filed Against a Garage

The most common problem any garage will face is alleged faulty workmanship brought by customers.

A garage owner can do his best to advise a customer that a repair is urgently needed.

He can document the needed repairs and keep the documents on file.

Documentation is great and absolutely necessary, but it does not pay for the cost to defend a claim or ultimately pay for the loss.

An example from real life...

John operates Swifty Tire and Auto Repair.  

One day a customer shows up at his garage with the request to help replace his battery.

The car is unique because the battery is located in the trunk.

Before releasing the car to the customer, he advises him of the safety problems associated with the battery set up.

The owner has the battery terminals exposed inside the trunk, so any cargo is able to slide around and come into contact with the exposed terminals.  

This could obviously start an electrical fire.

The customer says its fine the way it is, so John notes his files and releases the vehicle.

A few days later, the customer calls John to say he had an electrical fire in the trunk of his car and he now wants John to pay for his car.

The car was pretty old and beat up, so John believes its just a scam to get him to pay for the customer to buy a new car.

John doesn't have the money and the customer is threatening legal action, so he turns the claim in to his insurance company.

The company claims adjuster is really good.  He takes the problem off John's plate and starts negotiating with John's customer.

The claim ends up settling for $5,900.  John is happy and the customer is extremely happy with the money because his vehicle was not worth that amount before the loss anyways.  

How Much Does Garage Insurance Cost?

Garagekeepers insurance cost varies significantly between individuals and businesses.

Factors that impact your premium may include:

The good news is that you have options.

 Whether you own a small, private garage or a large company, you can handpick insurance policies that fit your needs.