A Guide to Insurance for an Auto Repair Shop

Automobile repair shops are a unique business. They offer a wide variety of mechanical services, from engine repair to tune-ups for all different makes and models of vehicles.

Sometimes the business is a stand-alone service such as an auto mechanic, and sometimes it is part of another business like a car dealership or filling station.

Auto repair shops may specialize in specific types of repair, such as transmissions or brakes, or service other types of motorized vehicles, such as snowmobiles or recreational vehicles.

Some shops will repair or rebuild parts such as brake drums, or custom-make old, difficult-to-replace parts.

One common factor that affects all different types of auto garages is the risk of running the business.

A single accident in the auto shop can result in a lawsuit that damages the financial health of the business. For this reason, it’s important to have accurate and sufficient insurance coverage in place for an auto repair business.

As an insurance agent, we have a lot of experience in helping our client find the best auto repair shop policy. Here is the basics of what you need to know to ensure you are covered as an auto mechanic.

What is Garage Insurance?

Typically known as auto service and repair insurance, or sometimes as garage insurance, it protects against a wide variety of liabilities often faced by garage owners, an auto body shop or auto repair shop.

These liabilities can include customer slips and falls or damages to vehicles resulting from faulty work.


Which Businesses Can Use Garage Insurance?

Any businesses that have a physical location such as a garage, parking lot, or storage area used to repair or store vehicles will usually need garage insurance.

The types of businesses include:

  • Automotive repair shops
  • Body shops
  • Tow or impound lots
  • Muffler shops
  • Transmission shops
  • Auto dealerships
  • Tire and battery repair facilities

What Kind of Insurance Does an Auto Repair Shop Need?

No matter what specialty, every auto repair shop needs general liability insurance, errors and omissions, and commercial property insurance.

Just like regular business liability insurance, a garage liability insurance policy covers an auto repair shop against lawsuits and medical costs that could arise from the injury of someone while on their business premises.

Unlike regular office buildings or retail stores, auto repair shops have a higher risk of more severe injuries to both staff and customers. For this reason garage liability insurance help provide the necessary protection for your company.

If you have employees you will also need workers’ compensation insurance and if you store client information, cyber liability insurance is also necessary. Workers’ compensation insurance is required for all businesses with a physical presence where workers can potentially be injured on company property while at work.


What Does a Garage Insurance Policy Cover?

Garage liability (also known as garage keepers insurance) covers claims similar to general liability insurance, namely injuries and property damage that your business operations cause to people who aren’t employees.

However, garage liability specifically covers incidents caused by garage operations like a mechanic test driving a customer’s car. This is the same coverage for auto body shop insurance. 

If the mechanic hits another vehicle, garage liability pays for the damage to that vehicle. Unfortunately, the customer’s car is not covered. For that extra coverage, your business will need garage keepers insurance coverage.

Garage keepers Legal Liability coverage is an optional coverage designed for business owners who offer towing services or operate gas stations. It protects the customer’s vehicle when you are keeping it at a covered location for parking or storing, or to perform service.


Property and Equipment Insurance

While a business property insurance policy will protect your auto repair shop building, you’ll still want to consider coverage for the special equipment. Property and equipment insurance covers your auto shop in case of power surges, mechanical breakdowns, burned out motors, or if employee accidents cause the equipment to fail.

Most insurance companies will offer options for an auto repair shop  to fit your unique needs. These additional options for coverage include:

  • Portable tools and equipment coverage
  • Employment practices liability insurance
  • Business Continuation Insurance

What is the Difference Between Garage Liability and Garage Keepers?

In a nutshell, the difference between garage liability coverage and garage keepers insurance coverage is the difference between liability insurance and physical damage insurance.

The first covers the insured’s liability for operations and autos, and the other covers damage to customers’ vehicles.

Insurers who offer garage insurance can usually endorse the policy so that it includes coverage found in general liability like personal and advertising injury.

This can be a convenient way for business owners in the automotive industry to get their fundamental exposures covered through a single policy.

Get a Quote for Auto Repair Shop Insurance

Auto repair shop insurance can be a complicated topic, as every business’s level of risk is different. As a business owner of an auto shop it is a good idea to get expert advice and support.

It’s not possible to purchase auto repair shop insurance on the internet for most types of businesses. However, you can begin by filling out online quote forms and obtaining a quote to send to you.


Jackson & Jackson Insurance Agents and Brokers offer commercial and business insurance with over 80 years of experience serving the San Dimas, Glendora, and LaVerne business communities.

Our agents can help you customize a menu of insurance solutions to meet your specific needs. Together we can review the options and develop a clear plan for auto repair shop and garage insurance coverage.

Call today or fill out one of our free online quote forms to get started.

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Are you ready to save time, aggravation, and money? The team at Jackson & Jackson Insurance is here and ready to make the process as painless as possible. We look forward to meeting you!

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