Garage Liability Insurance - Why Is It Important?

The cost of running a company can be incredibly overwhelming, especially if it’s only a small business. For any business owner, the costs that suppress profits and drive up overhead expenses are like an insurmountable obstacle to their company’s success. This is particularly true if you own and operate a garage business or an auto repair shop. 

If you are in the automotive industry, you might face higher overhead expenses for all aspects of your company’s existence and functioning. But, one thing you must not leave out is getting business insurance coverage. It’s time to take a close look at garage liability insurance and see how it plays a significant role in maintaining your company’s success, regardless of whether it’s based in Florida or some other state.

What Is Garage Liability Insurance?

It’s a special kind of insurance policy for repair shops, auto dealers, vehicle customization shops, service stations, parking lots, and tow truck operators covering the company’s liability exposure during its day-to-day operations. 

It’s important to emphasize that garage insurance and garage keepers insurance are two different coverage options. A garage keeper’s legal liability insurance policy provides protection when your customer’s car is damaged by collision, vandalism, fire, or theft. Garagekeepers’ coverage saves the day when your customer’s vehicle suffers damage while in your care.

Garage liability insurance can be a great addition to your company’s general liability policy. This specialty insurance covers the legal liabilities of businesses in the automotive industry for claims of third-party BI or bodily injury and PD or property damage, which may arise during their direct garage operations. Most commercial general liability insurance policies don’t provide coverage for such claims. To avoid buying an insurance policy that will only replace your basic business liability insurance as opposed to adding to it, make sure to compare what they include.

How Does Garage Liability Insurance Work?

A garage liability insurance policy provides coverage for third-party property damages and bodily injuries that a company’s day-to-day business operations cause to individuals who are not their employees. For example, these insurance policies cover damages caused by a mechanic test-driving a client’s car. If the mechanic hits another vehicle, a garage insurance policy can pay for the damages it suffers. Unfortunately, the customer’s auto will not be covered unless you acquire a garage keepers insurance policy.

Some insurance agencies that offer garage insurance can provide you with a policy that includes coverage for the above-mentioned incidents as well as for personal and advertising injuries, which are usually covered under general liability insurance. Since we’re talking about a single insurance policy, this is a highly convenient way to protect your business and cover its fundamental liability exposures.

What Does Garage Liability Insurance Cover?

This kind of liability insurance covers allegations made by individuals who are not employed in your company and have been somehow injured or harmed by your garage operations. For instance, garage insurance is usually triggered by:

  • Property Damage: A client’s repair costs after a hydraulic lift smashes their device (up to the specified coverage limits).
  • Bodily Injury: A seller’s medical expenses after they break their leg(s) from a fall into the service bay (up to the specified policy limits).
  • Completed Operations and Products: A client’s repair and medical expenses after a mechanic forgets to tighten up the vehicle’s lug nuts when performing a tire change (up to the specified coverage limits).
  • Employee Dishonesty: When one of your employees steals or vandalizes a customer’s vehicle.
  • Liability Claims: When a staff member files a discrimination lawsuit.

If you’re willing to pay a higher premium, you can add vehicles you’re conducting your business operations with, like parts delivery trucks and courtesy vans, to the insurance policy.

What Does Garage Liability Insurance Not Cover?

Although this specialty insurance is worth investing in if you’re an automotive business owner, it does have its shortcomings. This type of insurance doesn’t provide coverage for:

  • Damages to your clients’ vehicles while in your care
  • Damages and injuries caused by pollution
  • Injuries to employees (you need workers’ compensation for this)
  • Damage to the garage (you need commercial property insurance for this)
  • The amount exceeding the specified policy limit (if the coverage limit is lower than the total financial loss linked to third-party bodily injuries or property damages

Who Needs Garage Liability Insurance in Florida?

First of all, all automobile dealerships in Florida are required to have garage insurance. Additionally, most Florida counties require all body-work and auto repair shops to carry this type of insurance as well. Florida-based companies that provide towing services and service stations need garage insurance along with garage keepers liability insurance due to the nature of their operations.

If your business sells, transports, or fixes cars and/or other types of vehicles, we strongly suggest buying a garage insurance policy from a reputable insurance company. If you’re based in another state, you might not be required to carry such an insurance policy, but buying one is still a really smart business decision as it can save you a lot of money.

Some companies that need garage liability coverage are:

  • Auto repair shops
  • Auto body shops
  • Auto glass installers
  • Service stations
  • Oil change and lube shops
  • Emissions testing centers
  • Tow truck operators
  • Detailers
  • Automobile dealerships
  • Parking garages

What Is the Cost of Garage Liability Insurance in Florida?

The annual rate for a garage insurance policy in Florida falls between $1,500 and $4,000. It’s quite high compared to other general liabilities because it covers companies that are conducting more risky operations. Garage owners typically need other insurance policies for their businesses as well, like workers’ compensation and garage keepers liability insurance. This can increase the annual costs to somewhere between $3,000 and $6,500.

Garage liability insurance can safeguard your business in so many ways. Though the insurance cost can be an additional expense, it promises financial security for your company. There is so much more to learn about garage insurance policies in Florida and the United States in general. The best possible way to fully understand how it works and protects your automotive business is to request an insurance quote applicable to this type of policy. It would be best to contact a specialized and experienced insurance agent to discuss the key information regarding your unique situation.

Feel free to get in touch with one of our top insurance specialists via email or by calling the number below. We’re here to answer all your questions and help you find the perfect insurance coverage option for your business.