A Guide to Insurance for Auto Repair Shops

A Guide to Insurance for an Auto Repair Shop

If there is one thing that you need to know about auto repair shops, it is that it is a tricky business. An auto repair business generally carries more risks, as compared to businesses in other industries. The nature of work at an auto repair shop can even cause injury or bodily harm. And that is only one of the risks!

But the real question is, how can you insulate your auto repair business against these risks? The answer is simple: auto repair shop insurance. Purchasing insurance for auto repair shops can help protect against many risks and boost profitability in the long run.

Hence, use this guide on auto repair shop insurance to get the best deal for your business.

Why Do Auto Repair Shops Need Business Insurance?

Running an auto repair shop poses distinct hazards. Your customers rely on your small business to repair their automobiles and trucks, yet working on them can be dangerous. Using power tools and specialized gear can be dangerous, but with business insurance, you can have the peace of mind you need to manage and grow your auto repair business.

It safeguards your finances from frequent risks such as theft, lawsuits, and other damage caused by workplace accidents.

Vehicle repair can be difficult, and cars can be unpredictable depending on the customer’s driving habits, vehicle model, current technology such as ADAS, and other things that can lead them to break unexpectedly. Investing in adequate insurance relieves you of the anxiety of significant unexpected bills from break-ins, natural disaster damage, accidents, and other causes.

The Different Types of Auto Repair Shop Insurance

There are different types of auto mechanic insurance that you can get for your shop and auto repair shop owners should know which ones are important.

Below, you can find a list of some of the most important auto repair shop insurance types that you should invest in.

General liability insurance

Assume a customer trips while walking into your store and attempts to sue you. As an auto repair shop owner, you can use the following ideas for making your shop more secure for customers:

  • Avoid splattering grease or oil on the floor.
  • Customers should be kept away from high-risk regions.
  • Fix any cracks in the floor or walls that could lead to consumer harm.

Address any potential hazards based on client concerns, as they may notice issues that you do not. But the sad news is that accidents can occur even when all measures are taken.

With all of the equipment and cars in repair shops, customer injuries may be more serious than those sustained in a coffee shop, for example. Optimizing your shop’s layout is one approach to making your business safer for everyone. But if you want to insulate yourself against all of these risks, consider getting general liability insurance.

General liability insurance assists you in resolving disputes that may emerge during normal business operations.

Garage Keeper’s Insurance

Garage liability insurance (also known as garage keepers coverage covers claims similar to general liability insurance, such as injuries and property damage caused by your business operations to non-employees.

Garage liability, though, explicitly covers occurrences caused by garage operations, such as a mechanic test-driving a customer’s car. This is equivalent to auto body shop insurance.

If the mechanic impacts or hits another vehicle, garage liability covers the damage. But unfortunately, the customer’s vehicle will still be uninsured. Your business will require garage keepers insurance to provide that extra layer of protection.

Garage Keepers Legal Liability coverage is an optional policy meant for business owners that provide towing services or run fueling stations. It covers the customer’s vehicle when it is kept in a covered location for parking, storage, or performing service.

Without garage keeper insurance, you are obligated to pay for the replacement of any vehicle component destroyed by your staff.

Worker’s Compensation Insurance

When working with large machinery and vehicles, there is always the possibility of employee injury. Even a brief loss in concentration might be disastrous. A solid business insurance plan, especially one that includes workers’ compensation insurance, will come in handy here.

In 2019, the US Bureau of Labor Statistics recorded 9,460 non-fatal accidents and 60 fatalities in the auto repair industry. You can avoid the liability of paying hefty medical fees for employees injured on the job by purchasing worker’s compensation insurance.

Each state requires coverage, and the wage and medical benefits differ in every state. Workers’ compensation is considered social insurance since it is based on a social contract between management and labor. In this contract, business owners are protected against civil actions brought by injured workers on the job in exchange for acquiring workers’ compensation insurance.

However, each party’s benefits are limited.

Businesses obtain workers’ compensation insurance, which is underwritten by insurance firms and, in some jurisdictions, by publicly sponsored state funds.

Commercial Property Insurance

The possibility of losing your garage to an accident or natural disaster is worrisome for an auto repair shop owner. Purchasing commercial property insurance may be a wise decision because it protects all covered assets from loss. It is also one of the most important mechanic shop insurance types out there.

One important deciding factor in purchasing commercial property insurance is often its cost. The cost of commercial property insurance is mostly determined by the value of all of your business assets, including your building. Other risk-based criteria that influence your premium include:

Location: Is the area prone to natural calamities such as storms?

Construction: Is your structure made of fire-resistant materials? Is the electrical wiring, plumbing, and HVAC new or upgraded?

Occupancy: What is your line of work? A realtor’s office is often less dangerous than a restaurant or repair shop. Since we are specifically talking about an auto repair shop, the risks will be higher here. This means that this type of auto repair shop insurance might cost you higher than it would for any other business.

Protection against fire and theft: What is the distance between the nearest fire hydrant and the fire station? Is your auto repair business equipped with a fire alarm and/or sprinkler system? What about installing a security system?

Commercial auto insurance

After working on a vehicle, your technicians may need to put it through a road test to check that the problem has been remedied. It’s critical to remember that employee test drives carry the danger of items breaking apart and collisions. If something goes wrong, commercial auto insurance can protect you and your business from having to pay to repair damaged vehicle components.

Commercial auto insurance is a type of auto mechanic insurance that provides physical damage and liability coverage for amounts, conditions, and usage that personal auto insurance does not cover. This type of business insurance is quite important for your auto repair shop.

Every commercial auto insurance coverage has three fundamental components:

Collision and comprehensive coverage are included in physical damage insurance.

Liability insurance covers personal harm, property damage, and uninsured and underinsured motorists.

Medical payments, towing and labor, rental reimbursement, and auto loan or lease gap coverage are all available.

Business Income Insurance

Business income insurance, often known as business interruption insurance, assists in covering the loss of business income if you are unable to operate due to a covered danger. The following are examples of covered causes of loss:

  • Fire
  • Theft
  • Wind

Property and equipment insurance

While a business property insurance policy will cover the structure of your auto repair shop, you should also consider coverage for the specialized equipment. Property and equipment insurance is a type of auto mechanic insurance that protects your auto shop against power surges, mechanical breakdowns, burned-out motors, and staff accidents that cause equipment to fail.

Most insurance companies will provide you with options for an auto repair shop that will meet your specific requirements. The additional coverage possibilities inside this business insurance include:

  • Coverage for portable tools and equipment
  • Liability insurance for employment practices
  • Insurance for Business Continuity

How To Choose The Right Rates For Automotive Repair Shop Insurance

Choosing the right business insurance can be a little tricky. However, if you own a small automotive repair business, you may be able to get by with the most basic auto repair shop insurance. However, when your auto repair business expands and more people visit your shop, customer complaints and the likelihood of them suing you will rise. A more complete policy is recommended for larger shops.

Look for feasible insurance rates

A reputed insurance company may appear to be more expensive than an unknown one, but it is also the safest bet. Many independent insurance agents will approach you as a business owner. Rather than accepting the first price quotation you get, it’s usually a good idea to seek numerous quotes from different vendors. Also, there is often leeway to reduce the original estimate quote, so don’t be afraid to bargain a bit!

Bargain using your history of claims

If you’ve kept your business largely out of trouble and don’t have too many past insurance claims, you might be able to get a reasonable bargain on auto repair shop insurance. The rate for business insurance is determined by how much risk element is linked with your profile.

If, after undertaking a risk assessment, the insurance company determines that you will require frequent payouts, your premium for the same insurance coverage will rise.

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top
Scroll to Top