Garage Liability

Garage liability insurance is a type of commercial insurance designed for businesses in the automotive industry. It helps protect against certain liability claims involving bodily injury or property damage that arise from garage operations.

This coverage is commonly used by auto dealerships, repair shops, service stations, towing companies, parking operations, and other businesses that regularly work with, sell, service, or handle vehicles.

What Does Garage Liability Insurance Cover?

Garage liability insurance generally provides liability protection for accidents connected to a business's garage operations. Depending on the policy, coverage may include claims involving customers, members of the public, business operations, and the use of covered vehicles.

Bodily Injury

Garage liability insurance may help protect your business if someone is injured as a result of your automotive operations.

For example, if a customer is injured on your business premises or an employee causes an accident while operating a covered vehicle for business purposes, the policy may provide coverage for resulting liability claims.

Property Damage

The policy may also provide protection when your business becomes legally responsible for damage to someone else's property during covered garage operations.

Vehicle-Related Liability

Automotive businesses frequently need to drive vehicles as part of their normal operations. A dealership, for example, may drive vehicles during test drives, trips to auctions, deliveries, or service appointments.

Garage liability coverage can include liability arising from the operation of covered vehicles, subject to the terms and limits of the policy.

Products and Completed Operations

Depending on the policy, coverage may also apply to certain claims involving products sold by the business or work that has already been completed.

For example, a claim could arise if a repair performed by a business allegedly causes bodily injury or property damage after the customer leaves the premises.

Who Needs Garage Liability Insurance?

Garage liability insurance is commonly purchased by businesses whose operations involve automobiles or other vehicles, including:

• New and used vehicle dealerships
• Auto repair shops
• Service stations
• Body shops
• Towing companies
• Vehicle customization shops
• Parking garages and parking lot operators
• Other automotive service businesses

Insurance requirements can vary by state, license type, business activity, landlord, lender, and contractual agreement. Vehicle dealers should review the specific insurance requirements that apply to their dealer license and business operations.

What Garage Liability Insurance Does Not Cover

Garage liability insurance does not provide protection against every risk faced by an automotive business. Depending on the policy, separate coverage may be needed for:

• Damage to buildings or other business property
• Tools and equipment
• Collision or comprehensive damage to vehicles owned by the business
• Theft of vehicles owned by the business
• Weather-related damage to vehicle inventory
• Damage to customers' vehicles while they are in the business's care, custody, or control
• Employee injuries

Automotive businesses often combine several types of insurance coverage to address these different risks.

Garage Liability vs. Garagekeepers Insurance

Garage liability insurance and garagekeepers insurance cover different types of risks.

Garage liability insurance generally protects the business against liability claims arising from its garage operations, such as bodily injury or damage to property belonging to others.

Garagekeepers insurance is designed to protect against certain types of damage to a customer's vehicle while that vehicle is in the business's care, custody, or control.

For example, an auto repair shop may have customers leave their vehicles overnight for service. Garagekeepers coverage may provide protection if a covered customer's vehicle is damaged while being stored, serviced, repaired, parked, or test-driven.

What Is Garagekeepers Coverage?

Garagekeepers coverage is particularly important for businesses that regularly take possession of customer vehicles, including repair shops, body shops, service centers, towing companies, and parking operations.

Depending on how the policy is written, garagekeepers coverage may respond to losses involving events such as:

• Collision
• Fire
• Theft
• Vandalism
• Certain weather-related damage

Coverage varies by policy, so businesses should review whether their garagekeepers coverage is written on a legal liability, direct primary, or direct excess basis and understand the applicable limits and deductibles.

Physical Damage Coverage for Dealer Vehicles

Businesses that own vehicles for sale may also need physical damage coverage for their vehicle inventory.

Comprehensive and collision coverage can help protect owned vehicles against losses such as accidents, theft, vandalism, fire, or certain weather events, depending on the policy.

Businesses that finance their vehicle inventory through a floorplan lender may be required to maintain specific physical damage coverage.

How Much Does Garage Liability Insurance Cost?

The cost of garage liability insurance depends on several characteristics of the business and the coverage being purchased. Insurers may consider factors such as:

• The type of automotive business
• The number of employees and drivers
• Driving records
• Business location
• Annual sales or payroll
• The number and value of vehicles
• Requested coverage limits
• Prior insurance claims and loss history

Getting Garage Liability Insurance

When applying for garage liability insurance, an insurer may request information about your business operations, employees, drivers, vehicles, prior coverage, and claims history.

Motor vehicle records may also be reviewed for employees who will operate vehicles as part of the business. Businesses with prior insurance coverage may be asked to provide loss runs showing their previous claims history.

Worldwide Insurance Specialists, Inc. can help you review your garage operations and determine which liability, garagekeepers, and physical damage coverages may be appropriate for your business.

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