Garage Liability Insurance 101: What You Need to Know

What is Garage Liability Insurance?

Garage liability insurance is a policy that covers property damage or bodily injury caused by an incident out of garage operations. This insurance is added to the business liability coverage of car dealerships and parking lot or parking garage operators. Tow-truck operators, service stations, customization, and repair shops can also be added. The policy covers property damage and bodily injury caused by operations.

What does Garage Liability Insurance cover?

This insurance is a type of umbrella policy that covers the day-to-day operations of automotive-related businesses. This insurance will supplement the general liability policy of the company. Coverage includes bodily injury and property damage resulting from direct garage operations, which are not covered by commercial or business liability insurance.

How does this insurance work?

Before purchasing a policy, the business owner should ensure that the garage liability coverage supplements, rather than replaces, their primary business liability coverage. Up to the policy’s chosen limits, coverage will include injuries to customers while on business grounds. Furthermore, most garage insurance policies include an employee dishonesty provision for theft or vandalism committed by a customer’s car employee. Any cars used in business, such as courtesy vans and parts delivery trucks, may be added for an additional premium. 

The cost of a garage liability insurance policy can vary greatly depending on several factors, including your company’s annual revenue, the limits you choose, the coverage options you choose, and the deductible you choose.

Essential things to know before you sign up

Garage liability insurance does not cover the policyholder’s tools, building, personal, or business property. It also does not cover vandalism, stolen vehicles, or damage caused by events such as hail. The policy does not cover accidents or damage to the customer’s cars while serviced on-site. Furthermore, all primary and additional policy items will have a listed maximum liability coverage amount and may have aggregate limits by claim or by year.

Who should get it?

After learning more about it, you may wonder if you need garage insurance. If you own a business that deals with cars, having such a policy can be highly beneficial. This includes businesses such as emissions testing stations, valet services, and those that repair or customize cars. In a nutshell, garage liability insurance protects any business that sells, transports, or repairs cars.

In some cases, landlords who want to protect their assets from a particular business activity may require garage liability insurance.
Having the correct liability policies in place can also give you peace of mind. Keep in mind that garage insurance does not only cover standard vehicles such as cars and trucks.

Individual or fleets of motorcycles, trailers, and tractor-trailers can also be covered. While garage liability insurance is not required in most states, having it could save your business from financial ruin.

Difference between Garage Liability and Garage-Keeper Coverage

While they may sound similar, they can be very different, making it critical to understand what is covered and what is at risk. To put it simply, the difference in coverage is the distinction between liability insurance and physical damage insurance. It’s essential to understand the distinction between garage liability insurance and garage keepers’ coverage. The garage keepers’ coverage provides coverage for the customer’s vehicles while the shop owner is servicing them. This means that if any damage to the vehicle occurs on-site, the general liability will compensate for the loss. 

Do you have multiple garages in the same or different cities? Then you will need policies depending on the number of shops you have. The policy also includes coverage for theft and destruction caused by a dishonest employee.

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