What is Garage Liability Insurance?

Garage Liability Insurance is specialty insurance that covers legal liability of franchised and non-franchised automotive dealerships, auto repair service and maintenance shops, service outlets and other garage-related businesses.

The Difference between General Liability & Garage Liability

General Liability Insurance

Is a basic policy required by every business entity. It provides coverage from common liability exposures such as client or customer injury or property damage arising from your company’s operations, products or services.

Garage Liability Insurance

• This policy provides industry specific coverage (directly related to a garage’s daily operations) by combining both General Liability & Auto Liability.
• As a type of umbrella policy, it provides broader coverage for certain risks exposures normally excluded from a standard general liability insurance policy. This could include:

- Employee discrimination claims & lawsuits

               - Employee dishonesty

Do you need Garage Liability?

Any business that sells and/or handles customers’ vehicles, providing services that include vehicle maintenance, repair or storage, in areas that are open to the public must consider Garage Liability Insurance. 

However, it depends on the nature and type of business operation.  Some companies may need both, but most can be adequately protected with just one or the other.

Garage Insurance Classes of Business

Automobile businesses that require protection from Garage Insurance programs include:

Wholesale & Retail Auto Dealers & Brokers

• Used Cars
• Truck & Tractor
• Motor Homes
• Trailers
• Motorcycle/ATV

Service & Repair Operators

• Auto Maintenance & Repair
• Mobile Auto Repair Services
• Body Shops & Painting
• Car Washers & Detailers
• Full-service gas stations with Auto Repair/ Convenience stores
• Auto Storage, Parking Lots & Garages
• Impound yards
• Valet Parking

What is covered by a Garage Liability Insurance Policy?

Any business that deals with automobiles faces unique risks.  Garage Liability Insurance fortifies a company’s liability coverage with its ‘excess liability’ provision and is highly recommended for firms operating in the automotive industry.  

This policy responds to bodily injury and property damage claims by non-employees, customers and other third- parties, harmed by your company operations.  Coverages includes:

Premises Liability

Garages, parking lots, auto body shops and service centers can be dangerous places to be in. Different types of accidents can occur on business property at any time.

While a General Liability policy covers injury and damage to property arising from common accidents such as trips and falls – regardless of negligence or fault, premise liability insurance focuses on personal injury caused by negligence in work operations or any unsafe or defective condition on the property.

A separate premise liability policy can offer higher limits to cover medical expenses when compared to a CGL policy.

Customer Property Damage

This portion of the liability coverage pays for repair or replacement of property (belonging to a non-employee including client, customer or vendor) damaged during routine company operations.

Auto Liability

A customer’s car can be involved in an accident during a test drive or collide with another vehicle while being parked by a valet.  This policy covers damage to the other vehicle and any medical expenses for injuries sustained by the other driver.

Product & Completed Operations

Sometimes accidents involving a customer’s car can occur (away from your business premises) because of faulty repair, negligence of shop employees or from the installation of an incorrect or defective part.   

This part of coverage covers medical expenses and repair bills and any other third-party property damage or injury costs arising from the incident.

Legal Costs & Attorney Fees

Your company could be sued by a customer over an accident that may have caused injury or property damage.  This policy covers legal costs, attorney fees and any compensation or settlements awarded by the court.

Insurance Exclusions – what you should know

Policy exclusions refer to hazards, perils or events that aren’t covered by your policy.

Garage Liability Insurance does not provide coverage for:

• Employee injury
• Business property
• Business Interruption
• Damage or theft of customer vehicles in your care and custody
• Damage to own vehicles

Other types of coverage you may need.

Garagekeepers Insurance

Most garage polices contain two important but separate policies - Garagekeeper’s Insurance and Garage Liability. These two coverages go well together in that they aim to cover important exposures arising from your operations.

Parking lot and garage operators can be held liable for loss or damage to a customer’s car and its contents while it is in the business’s care.

This policy will cover a customer’s automobile for accidental damage including fire, vandalism, theft and weather-related events.

Business Property Insurance

Auto dealerships and automobile repair and service facilities can be expensive to set up. To effectively and efficiently handle service and repair on different makes and models, business owners have to invest in costly diagnostic equipment, machinery, tools and inventory - spare parts and supplies.

Repair or replacement of business property damaged by fire, certain natural hazards, theft & vandalism can be challenging and costs money.

Commercial property insurance covers damage or loss to business assets from covered perils.

Business Income Insurance

Business owners may still have to deal with overhead costs and pay bills even when business operations are disrupted or when their establishments remain closed due to a covered loss.

Loss of income coverage safeguards your company from incurring further losses and liabilities by helping you meet these financial obligations during business downtime.

Workers’ Comp

Working with automobiles using heavy machinery, power tools and equipment always carries the risk of employee injury.  Service areas and repair bays covered with oil residue and grease and areas with poor lighting can create a dangerous environment for shop employees.

When accidents or injuries happen, this policy can help:

• Provide medical care and cover rehabilitation costs
• Compensate for loss of income
• Provide permanent injury/disability and death benefits

Pollution & Tanks Liability

Auto repair garages and automotive service stations often use underground storage tanks (USTs) or aboveground storage tanks (ASTs) to collect and/or store petroleum products – motor fuel, heating oil, solvents, lubricants and used oil.  Accidental release and spills can increase the risk of fire and explosion that can cause injury, fatality, facility damage and serious environmental disasters.

Storage tanks liability insurance not only covers third-party injury and property damage following leaks, spills and explosions but also protects your business from pollution related claims and lawsuits.