Garage- and car-based businesses such as auto repair shops, dealerships and tow truck services have more hazardous risks compared to most small businesses. For example, a customer who slips in leaked motor oil could injure themselves and sue your business.

A standard general liability insurance policy may not cover you for the risks that come with car service businesses. You’ll need garage liability insurance to have sufficient insurance.

What Is Garage Liability Insurance?

Garage liability insurance is a type of small business insurance for car service and garage-based businesses. Also called “garage insurance,” it helps pay for accidental injuries and property damage due to hazardous workplaces like a garage or repair shop.

What Does Garage Liability Insurance Cover?

Garage liability insurance covers injuries and property damage accidentally caused to others. Garage liability insurance coverage can be broken down into these parts.

Injuries

This portion of your garage liability insurance covers injuries accidentally caused to others, such as a customer who slips and falls in your garage. This does not include injuries to your employees (that’s covered by your workers compensation insurance). Injury liability insurance also covers your legal costs, judgments and settlements if you are sued because of a non-employee injury.

Property Damage

This portion of a garage liability insurance policy covers property damage accidentally caused to others. Like liability insurance for injuries, it pays for your legal costs, judgments and settlements if you are sued because of property damage. This does not cover damage to a customer’s car (that would be covered by garagekeepers insurance).

For example, if you are test driving a customer’s car and crash into someone’s fence, this pays to repair their fence.

Products-Completed Operations Coverage

This covers injuries and property damage that happen after the work has been completed, due to problems such as faulty repair, defective parts or another liability claim related to parts or services that you provided.

For example, if you accidentally use the wrong part while repairing a car and it causes damage to the vehicle, products-completed operations insurance would pay for repairs.

What’s Not Included in a Garage Liability Insurance Policy?

Here’s what’s typically not covered in a garage liability policy:

• Business property. Damage to your building and business property (such as tools and computer equipment) is covered by commercial property insurance.
• Customer property. Damage or theft to your customers’ vehicles while under your care is not covered under garage liability insurance. You’ll need a separate garagekeepers insurance policy for this kind of damage.
• Damage to your work vehicles. If your work vehicles are damaged or stolen, you’ll need to file a claim under the collision or comprehensive portion of your commercial auto insurance policy.
• Employee injuries and illness. If one of your workers suffers an injury or illness due to their work, your workers compensation insurance covers their medical bills, lost wages and related expenses.
• Intentional acts. Property damage or injuries that are intentionally caused by you are not covered. But vandalism caused by someone else would fall under your commercial property insurance.

Who Needs Garage Liability Insurance?

Small businesses that are in the auto industry generally need garage liability insurance, such as:

• Auto dealerships
• Auto detailers
• Auto glass installers
• Auto repair shops
• Auto service stations
• Body shops
• Detailers
• Emissions testing centers
• Muffler shops
• Oil change and lube shops
• Parking garages
• Tire and battery repair facilities
• Towing or impound lots

How Much Does Garage Liability Insurance Cost?

The cost of garage liability insurance depends on several factors, such as:

• Your business type
• Your business location
• How long you’ve been in business
• Your business’s claims history
• Your coverage and deductible amount

What is the Difference Between General Liability and Garage Liability Insurance?

Here are the key differences between general liability insurance and garage liability insurance.

General Liability Insurance

General liability insurance covers bodily injuries and property accidentally caused to others, such as damaging a client’s property while visiting their home. It also covers claims of copyright infringement and reputational harm.

But general liability insurance often excludes hazardous risks that are in workplaces such as a garage or auto service business. For example, a general liability insurance might not cover medical bills if a customer slips in leaked motor oil in your garage.

Garage Liability Insurance

Garage liability insurance is similar to general liability in that it covers injuries and property damage accidentally caused to others, but it covers hazardous risks that are specific to the auto service business.

For example, if a customer slips in leaked motor oil in your garage, their medical bills would be covered under a garage liability insurance policy.

Garage Liability Insurance vs. Garagekeepers Coverage

Garage liability insurance covers problems like accidental injuries and property damage to others. But it does not cover a customer’s car while it’s under your care.

Garagekeepers insurance covers a customer’s vehicle while it is under your care. For example, if you own a parking garage and someone vandalizes a customer’s car, your garagekeepers insurance can cover the repair bills.

Garagekeepers insurance covers damage to customers’ cars for problems such as:

• Accidental damage
• Fire
• Severe weather such as hail or wind
• Theft
• Vandalism

Summary: Garagekeepers Insurance vs. Garage Liability Insurance