Garage keepers insurance and garage liability insurance cover different risks in the auto services industry. You may need both policies to financially protect your business.
Any business that maintains or stores customer vehicles on its property faces unique risks. A customer’s car could be stolen or vandalized, or a customer could be injured by an accident at your garage.
Garage liability insurance and garage keepers insurance are two insurance policies designed specifically to protect auto service businesses.
Garage liability insurance protects against the risks of allowing customers into a garage, such as slip-and-fall injuries or accidental damage to a customer’s property—excluding their vehicle.
Garage keepers insurance covers customer vehicles that are stolen or damaged while in your care. It’s sometimes called storage location insurance or garage keepers liability insurance.
What is garage liability insurance?
A garage liability insurance policy is a type of general liability insurance that’s designed for the unique risks of operating a garage with heavy machinery and other hazards.
For most businesses, general liability coverage insures against common claims from people outside of your business. For example, it would cover a customer’s bodily injury, damage to a customer’s property, or an accusation of slander or copyright infringement.
However, general liability insurance excludes these risks for businesses that sell, store, and service vehicles as part of their business operations. This includes car dealerships, service stations, body shops, oil change shops, tow truck operators, and parking garages.
Garage liability coverage, also known as garage insurance, provides the same protection as general liability, but extended to the risky setting of a garage. This type of coverage includes:
Customer injuries and related medical bills
Physical damage to a customer’s property at your business (but not their vehicles)
Products-completed operations insurance, in case a customer claims they were physically or financially harmed because your business used defective parts or made a faulty repair
Legal defense costs for any of the above, including a settlement or court-ordered judgment
What is garage keepers insurance?
Garage keepers insurance covers damage or theft of a customer’s vehicle while it’s in your care, custody, or control. That includes when it’s parked, being serviced, or during a test drive.
This policy covers vehicles stored in a parking garage or a dealer’s lot, or serviced at an auto repair shop or car wash. If a customer’s car is damaged by fire, vandalism, or an employee’s carelessness, your garage keepers insurance protects you from financial losses, including legal costs if the customer sues.
Even if the customer had comprehensive coverage and filed a claim with their personal auto insurance, their insurance company could blame you for the loss and expect your business to pay.
There are a few kinds of garage keepers insurance coverage:
Legal liability insurance pays for a claim if you’re found legally responsible for a loss, such as negligence that led to theft of a customer’s vehicle.
Direct primary insurance automatically covers a loss, regardless of who is at fault.
Direct excess insurance covers losses after the customer’s personal auto insurance reaches its limit.
Dealer’s open lot (DOL) or dealer’s physical damage coverage covers an auto dealer’s inventory.
Direct primary coverage is more expensive than the other options. A key reason for choosing direct primary coverage is it can make your customers happier by quickly resolving a claim, rather than dealing with lawyers and accusations over who was at fault for a vehicle’s theft or property damage.
You can choose to buy a policy that covers collisions and theft, or comprehensive coverage that protects against non-collision damages like fires, floods, and hail. Be sure to carefully read the policy details so you know what’s covered.
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What is the difference between general liability insurance and garage insurance?
General liability insurance covers common third-party risks for most industries, such as a slip-and-fall accident that results in a customer’s injury. It excludes this coverage from auto service businesses and garage operations because they’re considered high risk.
Garage liability insurance covers the same risks as a general liability policy, but without the garage exclusion. It covers third-party risks for repair shops, towing services, parking garage owners, and other businesses that service and store vehicles.
Do I need both garage keepers coverage and garage liability insurance?
Just as most small business owners buy general liability insurance, you likely need a garage liability policy to cover the risks of owning a garage business that deals with the public on a regular basis.
If a customer is injured in your repair shop, or accuses your business of a faulty repair, you could wind up with an expensive lawsuit. A garage liability policy could reduce the financial impact of such a claim.
Businesses that store and service other people’s vehicles should also carry a garage keepers policy. Imagine the financial impact on your business if vehicles entrusted to you were stolen or vandalized. Garage keepers insurance covers these losses, in addition to accidental damage.
Get quotes for garage policies with Insureon
Complete Insureon’s easy online application today to compare quotes from top-rated U.S. insurance providers. Our licensed insurance agents can help you find specialized coverages, such as garage liability insurance or garage keepers insurance. Once you find the right type of insurance, you can begin coverage and get a certificate of insurance in less than 24 hours.
