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Insure and Protect Your Auto Repair Shop | Econosurance

Cars are the primary vehicle for millions of Americans and have been a fundamental part of the modern lifestyle for decades. People take pride in the cars they own and often depend on them to get from one place to another. Naturally, every object with moving parts requires regular maintenance and occasional repairs. Car repair shops are essential for keeping cars up to date, which in turn keeps the roads and people on them safe.

However, car maintenance shops also need to protect themselves. Repair shops can face lawsuits when something goes astray. Furthermore, they can experience great losses if natural disasters hit or something is stolen. It might take just one incident for a business to go under.

Auto repair shop insurance can reduce the risk of financial ruin and help cover costs resulting from the aforementioned events. The following sections will explain the purpose of auto repair shop insurance in more detail, outline what it covers, and provide tips for getting the best price.

Why Do You Need Auto Repair Shop Insurance?

It is fair enough to say that all businesses need insurance. Auto repair shop insurance, sometimes also referred to as garage keeper’s insurance, is specifically designed for the mechanics’ needs. Despite following all safety regulations and protocols, accidents can still happen. In an auto repair shop, accidents can have dire consequences due to all the heavy machinery and vehicles. Additionally, no one can be fully safe from natural disasters or criminal activity. It is always better to be prepared.

Here are some of the risks that can result in hefty costs:

  • A worker’s illness or injury, e.g., from exposure to toxic materials
  • A customer injuring themselves, e.g., by slipping and falling
  • Being sued because of faulty workmanship or defective parts
  • Damaging a customer’s vehicle
  • Fire, extreme weather, and other natural disasters
  • Theft and vandalism

If you do not have insurance, you will need to pay everything out of your own pocket. In a good scenario you will only lose some of your assets, but in the worst case you might have to relinquish your entire business.

What Does Auto Repair Shop Insurance Cover?
What Does Auto Repair Shop Insurance Cover?

Auto repair shop insurance is usually a combination or a variation of generic business policies. You can read more about them in the next section, but here is an overview of the most typical packages for auto repair shops.

Garage Liability Insurance

This is a standard policy that covers expenses resulting from third-party bodily injuries, property and vehicle damage, medical bills, and other related losses. It includes coverage for situations when you or your employees are at fault. Large claims due to injuries and vehicle damage is one of the biggest risks auto repair shops face, so having insurance that covers it is a huge asset and should be part of every service shop’s operations.

Garagekeepers Liability Insurance

This provides coverage if a client’s vehicle is damaged at your repair shop or while the vehicle is in your care and control. The cause of the damage could be, for example, fire, theft, weather, or a lift accident. It does not, however, provide coverage when the client’s items inside the car are damaged or when the damage is caused by faulty parts or poor quality of work. Nevertheless, if you keep vehicles in your shop, you are going to need it.

Some insurance companies will also require you to purchase on-hook towing insurance. This covers towing or hauling a vehicle if needed after a collision, fire, theft, explosion, or vandalism. Garagekeepers liability insurance can also be purchased by service stations, detail shops, and other businesses that deal with vehicles and provide temporary on-site storage for them.

Auto mechanic talking to a client in front of a red car

What Other Insurance Do Auto Repair Shops Need?

In addition to the insurances specifically for auto repair shops, several other insurance policies can be taken into consideration. Most auto repair shops will add several other insurance policies to the main package to ensure their business is covered:

  • Business property insurance: Can also be referred to as commercial property insurance. Provides coverage for losses due to fire, vandalism, smoke, theft, and other unpreventable causes, except earthquakes and floods.
  • General liability insurance: Covers the basic liability issues of a business. General liability insurance provides coverage for losses resulting from lawsuits, damage to someone else's property, and injuring a customer. 
  • Business owners’ insurance: The BOP insurance combines property insurance and general liability insurance into one complete package.
  • Employee theft and crime coverage: Covers theft, dishonesty, and fraudulent acts committed by employees.
  • Business auto insurance: Also called commercial auto insurance. This insurance covers the vehicles owned by the business.
  • Equipment breakdown protection: Protects against great financial loss when equipment breaks down. 
  • Workers’ compensation insurance: When an employee gets sick or injured while fulfilling their job responsibilities, this will cover their lost wages and medical costs in exchange for giving up their right to sue the company. Some states require nearly every business to have this coverage.

In general, businesses can have very diverse needs depending on their size, location, clientele, 

How to Save Money on Auto Repair Shop Insurance?

Auto repair shop insurance saves you money if an accident occurs, but that does not mean you cannot save some money on the policy itself. When insurance companies calculate the premiums and costs, they first determine the level of risk you pose. Understanding the factors that affect their assessment of your risk level can also help you make better informed decisions. Here are some tips for making sure you get good quality insurance at a reasonable price:

  • Combine policies – If you have several policies with the same insurance company, you can often qualify for a bundle discount, which can substantially reduce your costs. Check with the agency to see if they offer that option.
  • Increase your deductibles – By increasing your deductibles, you save on your premiums. However, this naturally leads to larger out-of-pocket expenses when a claim is filed.
  • Pay in full Many insurance companies give you the option to pay for the entire year in full, which is usually cheaper than paying monthly.
  • Improve security Installing cameras, fences, and alarms reduces the risk of vandalism and theft. Additionally, if possible, store vehicles inside overnight. Lower risk of theft can translate to lower insurance premiums.
  • Check the background of your staff The track record of your staff will determine the costs of your insurance, because insurance companies perceive it as higher risk if employees have had several accidents or claims in the past.
  • Fire safety – Sprinklers, smoke detectors, and fire extinguishers all decrease the risk of a serious fire, which means that insurance companies can set lower premiums. 
  • Shop around Each insurance company will have their own method for calculating risk. Since each company could give you a different quote, you will not find the best price unless you get quotes from multiple companies.
  • Reach out to an insurance expert Contacting someone who is in the field of insurance can save you both time and money when it comes to picking out the right policy.

If you are not yet sure whether this insurance is for you or you need help with deciding which policies to get, email us, give us a call, or fill out the free quote form on our website. We would be happy to help!

 

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