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Company insurance is intended to safeguard the financial assets of a business owner and is a vital investment for an auto repair shop.

Company insurance is intended to safeguard the financial assets of a business owner and is a vital investment for an auto repair shop.

This article will discuss the primary insurance coverage for vehicle repair businesses, general liability insurance, as well as additional policies that are appropriate for this industry.

Car Repair Shops Need General Liability Insurance

Every firm, regardless of sector, has risks that should be insured. General liability insurance is the most frequent and comprehensive form of coverage that company owners purchase.

General liability insurance covers the following risks:

Physical harm

Damage to property

Medical expenses

Legal defence and decision

Personal and commercial harm

While general liability insurance is not legally needed for companies, operating without it is exceedingly dangerous. If your company is sued, you might face costs in the hundreds of thousands of dollars (or more). The only way to avoid this sort of catastrophe from destroying your organisation is to have an adequate general liability insurance coverage in place to assist pay for these losses.

Situations That A Car Repair Shop’s General Liability Insurance May Cover

Example 1: While test-driving a customer’s automobile, one of your technicians causes an accident that totals a third party’s vehicle. The damage to the third party’s car would most likely be covered by general liability insurance. (The customer’s car is protected by a separate insurance policy.)

Example 2: A client is brought into one of your service bays to inspect the problem with their car in person. A component housed above falls and injures the client while he is in the bay. The injuries would most certainly be covered by general liability insurance.

Example 3: One of your technicians accidently backs a customer’s car against the service bay door while moving it out of a repair bay. The damage to the door and the customer’s car would most likely be covered by general liability insurance.

Of course, this is not an entire list of risks covered by a general liability insurance policy, and certain situations may result in a specific peril not being covered. To minimise coverage gaps, it’s always better to speak with your agent about the terms of your policy.

General Liability Insurance Cost

The typical auto repair firm in America costs $400-$700 per year for $1 million in general liability insurance.

The cost of your coverage will be determined by a number of variables. Among them are your:



Employees’ number

Per-occurrence restriction

The overall aggregate limit

You may be able to get general liability insurance at a lower cost if you buy it as part of a business owner’s policy (BOP) rather than as a separate policy. A business interruption policy (BOP) is a more complete option that covers numerous types of coverage, such as business interruption and property insurance.

Other Types of Coverage Required by Car Repair Shops

While general liability insurance is the most crucial, there are various different types of coverage to be aware of. Other forms of insurance that all auto repair firms should have include:

Insurance for Commercial Property

Commercial property insurance may cover objects owned by the business and stored on the company’s premises in addition to the property itself. If your auto repair company owns the building where it is situated, it will almost certainly need commercial property insurance to safeguard it.

These kind of structures often have expensive build-outs and a plethora of specialised equipment. In the case of a loss, make sure you have adequate coverage to rebuild the structure and/or equipment. This protection is typically included as part of a company owner’s insurance (BOP).

Insurance for Workers’ Compensation

If your auto repair company employs people, state law may require it to have workers’ compensation insurance. Employees’ on-the-job injuries are often covered through workers’ compensation.

Working in vehicle repair businesses may be dangerous, so ensure sure every employee is fully protected. Though you work directly with automobiles, you may be covered by this policy, even if you are not legally allowed to do so. Workers’ compensation insurance is often acquired as a separate policy.

Types of Insurance That Some Auto Repair Shops May Require

In addition to the insurance listed above, your vehicle repair company may need other forms of coverage based on particular features of your operations. Some of them may not apply to you, so be sure to ask your agent whether policies are appropriate for your company.

Insurance for Commercial Vehicles

If your auto repair company provides loaner cars and/or has its own tow truck, you must most likely carry state-mandated minimum levels of commercial auto insurance. In most areas, automobiles operated on public highways must be insured, while commercial auto insurance is required for vehicles owned by a company.

You’ll almost certainly want to carry much more insurance coverage than your state mandates. In many circumstances, state-mandated minimums provide just rudimentary protection, leaving firms vulnerable to a dangerous spectrum of possible threats. Commercial vehicle insurance is commonly included in a company owner’s policy.

Umbrella Insurance for Businesses

Working on and near automobiles has significant hazards. Liability charges related with certain occurrences might sometimes exceed main policy limitations. Commercial umbrella liability insurance is often added to underlying main policies to provide additional protection against big covered lawsuits.

Additional Security Measures for Your Company

Although investing in company insurance is simple (and necessary), it should not be your first line of defence. Yes, insurance will reimburse your company for cash losses incurred as a result of an occurrence, but it is much preferable to avoid losses altogether.

With this in mind, here are a few steps you can take to better secure your company:

Make use of legally binding contracts and other business agreements. (We provide free templates for several of the most often used legal forms.)

To safeguard your personal assets, form a limited liability company (LLC) or a corporation. (To discover how to incorporate an LLC or company in your state, see our step-by-step tutorials.)

Keep your company licences up to date.

Streamline the internal procedures of your company. This will eliminate unneeded variables from routine activities and establish a secure, consistent environment in which to do business.

If your company is an LLC, you should check into LLC insurance.