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Exploring the Coverage: What Does Garage Liability Insurance Include?

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Exploring the Coverage: What Does Garage Liability Insurance Include?


What does a garage liability policy cover?

A garage liability policy covers injuries and property damage caused to others within a garage or auto service business. Here’s a quick breakdown:

  • Injuries to customers or visitors.
  • Damage to property that’s not a customer’s vehicle.
  • Legal defense costs in case of accidents.
  • Products-completed operations coverage.

Garage liability insurance is all about protecting your automotive business from the unexpected. Whether it’s a customer slipping on leaked motor oil or a faulty repair causing property damage, having the right coverage ensures you’re not facing crippling costs alone.

Businesses affected include:
– Auto repair shops
– Body shops
– Auto dealerships
– Oil change and lube shops
– Parking garages

My name is Ryan McEachron, and I’ve been immersed in the insurance industry for years. Through my work with ISU Insurance Services ARMAC Agency in Victorville, I’ve helped many businesses navigate the complexities of choosing comprehensive garage liability coverage.

Breakdown of Garage Liability Policy Coverage - what does a garage liability policy cover infographic brainstorm-4-items

What Does a Garage Liability Policy Cover?

Key Components of Garage Liability Insurance

Garage liability insurance is essential for businesses in the automotive industry. It covers several key areas to protect your operations and finances.

Operations Coverage: This insurance protects against bodily injury and property damage resulting directly from your garage’s operations. For example, if a customer slips and falls in your shop, the policy helps cover medical expenses and legal fees.

Bodily Injury: Coverage for bodily injury ensures that if someone is injured on your premises, the medical costs are covered. This includes injuries to customers and other visitors.

Property Damage: If your operations cause damage to someone else’s property, garage liability insurance steps in. For instance, if a customer’s car is damaged due to an employee’s mistake, the policy will cover the repair costs.

Direct Operations: The policy covers incidents directly related to your business activities. This includes damage caused by employees during the course of their work, such as damaging a vehicle while performing a repair.

Customer Injuries: If a customer gets injured while on your business grounds, the insurance will cover their medical bills and any legal costs if they decide to sue.

Legal Defense and Settlements: Legal fees can be substantial. Garage liability insurance covers the costs of legal defense and settlements if a lawsuit is filed against your business.

Common Exclusions in Garage Liability Policies

While garage liability insurance covers a lot, it’s important to know what it doesn’t cover.

Personal Property: The policy does not cover your tools, building, or other personal business property. For these, you’ll need separate commercial property insurance.

Vandalism: Damage from vandalism is not covered. If someone vandalizes your shop or the vehicles within it, you won’t be able to claim those damages under this policy.

Stolen Vehicles: Theft of customer vehicles is not covered by garage liability insurance. For this type of protection, you’d need garagekeepers insurance.

Natural Disasters: Events like hail, floods, or earthquakes are not covered under this policy. Special insurance is required to cover damages from natural disasters.

Understanding what a garage liability policy covers and its exclusions helps you make informed decisions. This ensures you have the right protection for your business.

Car repair shop - what does a garage liability policy cover

Comparing Garage Liability and Garagekeepers Insurance

Garage liability and garagekeepers insurance are two essential policies for businesses in the automotive industry. While they might seem similar, they cover very different risks. Let’s break down the differences to help you understand which policy you need.

What is Garagekeepers Insurance?

Garagekeepers insurance, also known as “storage location insurance,” covers a customer’s vehicle while it’s in your care, custody, or control. This type of insurance is crucial for businesses that store, repair, or maintain vehicles.

For example: If someone vandalizes a car while it’s at your auto repair shop, garagekeepers insurance can pay for the repairs.

Here’s what garagekeepers insurance typically covers:
Customer’s Vehicle: Protection for the vehicle itself while it’s on your premises.
Fire: Coverage if a fire damages a customer’s car in your shop.
Accidental Damage: Protection for accidental damage, such as a mechanic accidentally scraping a car.
Theft Protection: Coverage if a customer’s car is stolen while in your care.

Direct Primary vs. Legal Liability Coverage

There are two main types of garagekeepers insurance: Direct Primary and Legal Liability. Understanding these can help you choose the right coverage for your business.

Direct Primary Coverage
Automatic Coverage: This coverage automatically protects the customer’s vehicle, regardless of who is at fault.
Example: If a customer’s car is damaged by a fire in your shop, Direct Primary coverage would pay for the repairs, no matter who is responsible.

Legal Liability Coverage
Legal Responsibility: This coverage only kicks in if you are legally liable for the damage.
Example: If you’re found at fault for damaging a customer’s car during a test drive, Legal Liability coverage would pay for the repairs.

Separate Policies, Coverage Differences

It’s important to note that garage liability and garagekeepers insurance are separate policies that cover different aspects of your business.

Garage Liability Insurance
Property Damage & Injuries: Covers property damage and injuries accidentally caused to others during business operations.
Example: If you cause an accident while test-driving a customer’s vehicle, garage liability insurance covers the damage to the other car and any medical expenses.

Garagekeepers Insurance
Vehicle Protection: Specifically covers damage to a customer’s vehicle while it’s in your care.
Example: If a customer’s car is vandalized while parked in your garage, garagekeepers insurance covers the repair costs.

Claim Conditions

Understanding the claim conditions of each policy is crucial for ensuring you have the right coverage.

Garage Liability Insurance
Claim Conditions: Covers claims related to property damage and injuries caused by your business operations.
Example: If a customer slips on leaked motor oil in your shop, this insurance would cover their medical bills.

Garagekeepers Insurance
Claim Conditions: Covers damage to customer vehicles under specific conditions like fire, theft, or accidental damage.
Example: If a fire in your shop damages a customer’s car, garagekeepers insurance would cover the repair costs.

By understanding the differences between garage liability and garagekeepers insurance, you can ensure your business is adequately protected from various risks.

Next, let’s explore how these insurance policies support your business and why having adequate coverage limits is essential.

How Garage Liability Insurance Supports Your Business

Importance of Adequate Coverage Limits

Having the right garage liability insurance is crucial for several reasons. Here’s why it matters:

Risk Management

Running an auto business comes with risks. From slippery floors to faulty repairs, accidents can happen. Adequate insurance helps manage these risks by covering costs associated with accidents and liabilities. For example, if a customer slips on an oil spill in your shop, this insurance would cover their medical bills.

Legal Compliance

Many states require businesses to have certain insurance coverages. Not having adequate coverage could lead to fines or even the closure of your business. Make sure your policy meets all legal requirements to avoid these issues.

Financial Security

Accidents and lawsuits can be costly. Without sufficient coverage, your business might struggle to pay for damages or legal fees. Adequate insurance limits ensure that you have the financial backup to handle unexpected events. For instance, if a faulty repair causes an accident, your insurance would cover the resulting claims.

Customer Trust

Customers want to know they’re protected when they do business with you. Having comprehensive insurance shows you care about their safety and property. This builds trust and can attract more customers to your business.

Financial Impacts

Inadequate coverage can leave you paying out of pocket for damages, which can be financially devastating. A well-structured policy helps you avoid these costs and keeps your business financially stable.

Legal Requirements

Meeting legal insurance requirements is not just about compliance; it’s about protecting your business from severe penalties. Ensure your coverage limits meet or exceed what is legally mandated.

Business Reputation

Your reputation is everything. Being known as a responsible business that takes care of its liabilities can set you apart from the competition. Adequate insurance helps maintain a positive image and can even be a selling point for your services.

Next, let’s answer some frequently asked questions about garage liability insurance to clear up any lingering doubts.

Frequently Asked Questions about Garage Liability Insurance

What specific risks does garage liability insurance mitigate?

Garage liability insurance protects automotive businesses from a variety of risks that are unique to the industry. Here are the main types of risks it covers:

  • Bodily Injury: If a customer slips and falls in your shop, this insurance can cover medical expenses and any legal fees if they sue.

  • Property Damage: If a customer’s property (like a phone or laptop) gets damaged while in your shop, this insurance can help cover the repair or replacement costs.

  • Legal Defense: If a lawsuit arises from an incident covered by the policy, garage liability insurance can cover your legal expenses.

  • Products-Completed Operations: This covers damages or injuries that occur due to the products you’ve installed or the services you’ve provided after the customer has left your premises.

How does garage liability insurance differ from general liability insurance?

While both policies aim to protect businesses from liability claims, there are key differences:

  • Industry-Specific Coverage: General liability insurance is broad and covers a wide range of businesses. Garage liability insurance is tailored specifically for automotive businesses, addressing unique risks like those associated with repair shops, dealerships, and parking garages.

  • Exclusions: Standard general liability policies often exclude risks specific to automotive businesses, such as damages related to vehicle repairs or storage. Garage liability insurance fills this gap.

  • Additional Policies Needed: For automotive businesses, garage liability insurance needs to be complemented by garagekeepers insurance to cover damages to customers’ vehicles while in your care. General liability insurance doesn’t offer this kind of specific coverage.

Can garage liability insurance be customized for different automotive businesses?

Absolutely! Garage liability insurance can be tailored to fit the specific needs of various automotive businesses. Here are a few ways it can be customized:

  • Coverage Limits: You can adjust the coverage limits based on the size and scope of your business. Larger businesses with more foot traffic or higher-value services may need higher limits.

  • Additional Coverages: Depending on your operations, you might add other insurance options like cyber liability, employee dishonesty, or open lot coverage.

  • Types of Services: Whether you run a body shop, a towing service, or a dealership, the policy can be adjusted to cover the specific risks associated with your services.

For example, a body shop might need higher coverage for products-completed operations, while a parking garage might prioritize coverage for premises liability.

Understanding what garage liability policy covers is crucial for protecting your business from unforeseen risks. If you have more questions, don’t hesitate to reach out to a licensed insurance agent who can guide you through the process.


At ISU Armac, we understand the unique challenges faced by automotive businesses. Whether you run a repair shop, a dealership, or a towing service, having the right insurance coverage is essential for protecting your livelihood.

Garage liability insurance is a critical component of your business’s risk management strategy. It shields you from the financial fallout of customer injuries, property damage, and legal disputes. By covering these risks, garage liability insurance allows you to focus on what you do best—serving your customers and growing your business.

But insurance isn’t one-size-fits-all. That’s why we offer tailored solutions to meet the specific needs of your business. Our experts will work with you to ensure you have the appropriate coverage limits and options, providing peace of mind and financial security.

Protect your automotive business with confidence. Contact ISU Armac today to learn more about our comprehensive insurance solutions. Let us help you safeguard your business, so you can continue to drive success.