General liability insurance does not provide enough coverage for businesses like auto repair shops, dealerships, tow truck drivers, and service stations—these businesses need garage liability insurance. While garage insurance is similar to general liability, it comes with provisions for third-party bodily injury and property damage from garage operations and vehicles in the business’ care, custody, or control. The annual garage liability insurance cost typically ranges from $1,300 to $2,500.
Insurers like Next Insurance make it easy to get garage liability insurance for your auto repair shop. In just minutes, it can generate tailored policy package quotes, giving you the freedom to determine which is best for your business. After purchasing the policy online, you can get a certificate of insurance (COI) in minutes.
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Garage liability insurance costs usually fall anywhere from $1,300 to $2,500 annually. It normally costs more than general liability, but that is because auto service and repair shops are inherently riskier than, say, a clothing store. Garage owners may also need other lines of business insurance, like commercial auto, property, and workers’ compensation.
When providers are calculating the premium for a garage insurance policy, several factors are considered, including the following:
- Location
- Specific operations (e.g., body shop, dealership, service station)
- Business revenue
- Number of employees
During the application and quote process, expect the provider to ask more specific questions, which will not only impact rates but also eligibility for discounts. Be prepared to answer if your shop is certified, what type of paint is used if you do spray painting, and more.
A business owner’s policy (BOP) is one option to save. If the provider offers it, this is a policy where the garage liability and garagekeepers can be added to the property insurance to create one single policy for first- and third-party coverages. Providers will usually offer this package at a lower rate than if every policy was purchased separately.
Read our high-level guide if you’re looking for ways to save money on business insurance.
How Garage Liability Insurance Works
Similar to general liability insurance, garage liability offers coverage for injuries and property damage to third parties that are caused by your business operations. Personal and advertising injury, a standard in general liability, are usually available for garage liability via an insurance endorsement.
However, the key difference of garage liability is that liability is extended to include other people’s property. For example, if a mechanic test-drives a customer’s car and hits another vehicle, garage liability pays for the damage to that other vehicle. Unfortunately, the customer’s car is not covered. For that, you need garagekeepers coverage.
As a third-party liability policy, garage insurance covers allegations of negligence by your business that resulted in some form of harm. This can take the form of the following:
- Bodily injury: A customer’s medical bills after they trip and sprain their ankle in the waiting room
- Property damage: A customer’s bill for camera equipment in their trunk damaged when the car was lowered off the lift
In rare instances, providers will offer an endorsement for faulty workmanship.
Perhaps the most important exclusion in garage liability insurance is the one for damage to vehicles under the care, custody, or control of the business. If a customer claims their vehicle was damaged or stolen while it was kept at your business, this exclusion prevents the policy from covering this loss.
However, there is an optional coverage, or provision, called garagekeepers insurance. This covers autos in the business’ care, custody, or control by paying for the associated costs when the vehicle is damaged, lost, or stolen.
Like other vehicle theft claims, the coverage is for the vehicle, not its contents. Garagekeepers insurance covers damage caused by the following:
- Fire
- Vandalism
- Extreme weather
- Collision
- Theft
There are other exclusions, or incidents that are not covered by the policy. Common exclusions for a garage insurance policy are as follows:
- Injuries to employees
- Damage or injury caused by pollution
- Product recall costs
- Professional or organized racing or demolition activities
Who Needs Garage Liability Insurance
Any business in the automotive space that works directly with customer vehicles should consider garage liability insurance. Some small businesses that usually need garage insurance are as follows:
- Auto body shops
- Auto repair shops
- Service stations
- Auto glass installers
- Emission testing centers
- Detailers
- Tow truck operators
- Parking garages
- Car dealerships
Some industries require coverage to get licensure or certification. But even if it is not mandated, garage liability insurance is a wise investment for the financial health of your business.
Best Garage Liability Insurance Providers
- Next Insurance: Best for auto body shops
- The Hartford: Best for mechanics
- Progressive Commercial: Best for tow companies and impound lots
- Nationwide: Best for service stations
- Tivly: Best for finding garagekeepers liability insurance
Next Insurance: Best for Auto Body Shops
Pros
- It has a provision for faulty work coverage.
- You can get a quote in just minutes.
- You can purchase insurance online.
Cons
- It has no appetite for businesses with revenue above $5 million
- 4/7 customer service is unavailable—open 8 a.m. to 8 p.m., Monday through Friday
Standout Features
- Next offers garage liability for auto repair and body shops, along with coverage for oil change stations and car washes.
- Garagekeepers liability coverage is automatically included in the premier and deluxe policy packages.
- If your business is certified through AE, I-Car, or AAA-approved, it can save up to 19%.
- Next’s iOS and Android apps let you manage your policy, create and instantly share COIs, pay your bill, and file and track a claim.
Financial Stability: Although Next Insurance is still a new and grossing company, it has a solid financial rating. AM Best rated Next Insurance an A- (Excellent).
The Hartford: Best for Mechanics
Pros
- Its coverage is available nationwide.
- The Hartford has in-house adjusters.
- It has 24/7 call center for claim losses.
Cons
- Online quotes are not offered for garage liability.
- It has no commercial app to manage your policy.
- Information about coverage and endorsements is minimal.
Standout Features
- The Hartford is a great option for mechanics because it has inland marine insurance for tools and garage liability for businesses.
- Any additional coverage you may need (e.g., commercial property, workers’ comp, and professional liability) is available directly through it.
- Through your account portal, you can manage your policy, file a claim, and download a COI if you need proof of insurance.
Financial Stability: The Hartford has over 1 million small business customers. It has the financial strength you want to handle claims, as The Hartford’s AM Best rating is A+ (Excellent).
Progressive Commercial: Best for Tow Companies & Impound Lots
Pros
- It is the largest commercial auto insurer.
- It is available in all 50 states.
- It has a 24/7 call center for claim losses.
Cons
- It has a limited number of commercial policies.
- It has no app to manage your policy.
- You may have trouble getting a quote online
Standout Features
- It has an appetite for all types of vehicles, including tow trucks or even a fleet of tow trucks.
- Progressive can insure your vehicle and provide garage liability and garagekeepers coverage.
- It offers garagekeepers liability for tow truck operations and on-hook towing insurance.
- If you have commercial auto through Progressive, you are eligible for a discount on general liability or a BOP.
Financial Stability: Progressive has a solid financial rating. AM Best’s rating of Progressive is A+ (Superior).
Nationwide: Best for Service Stations
Pros
- It is available nationwide.
- It offers loss control services for shops.
- It has a 24/7 claims and customer service.
Cons
- You will likely need to call to get a quote.
- Information on online account maintenance options is minimal.
- The process for obtaining a COI is unclear.
Standout Features
- Nationwide offers garage liability and garagekeepers insurance for service repair and service stations. Depending on your class code when quoting, garage liability is automatically included with the general liability insurance coverage.
- Several endorsements and coverage enhancements make it ideal for service stations. These include expanded coverage for lost keys and tumblers, the cost to repair and replace a lost tumbler or even lock in a door, transit pollutant clean-up, and coverage for tools owned by employees.
Financial Stability: Nationwide has been in the insurance business since 1926 and is in a good financial position. AM Best rated Nationwide an A+ (Superior).
Tivly: Best for Finding Garagekeepers Liability Insurance
Pros
- General liability and workers’ comp are available.
- It can initiate a quote online quickly.
- It offers fast, free, and easy service to get insurance quickly.
Cons
- You can only start a quote process online—reps will call to finish the process.
- As a marketplace, Tivly doesn’t handle claims.
- 24/7 customer service is unavailable; its hours are Monday through Saturday, 8 a.m. to 8 p.m.
Standout Features
- As a marketplace, Tivly is a great option for finding difficult coverage for high-risk industries.
- Garage liability, garagekeepers, and even coverage for valet services can be found using Tivly’s network.
- Tivly works with over 200 different providers, MGAs, and agencies. It can help high-risk industries, like dealerships, find coverage.
- BOP, workers’ compensation, and garagekeepers are available for auto body shops, mechanics, and other auto industry-related companies.
Financial Stability: Tivly works with top-rated carriers like Acuity and Progressive. Acuity’s AM Best rating is A+ (Superior).
Frequently Asked Questions (FAQs)
Mechanics are liable for damage resulting from incorrectly done repairs. Auto service companies are expected to perform duties professionally so that autos are functional and safe. If faulty workmanship results in property damage or injury, garage liability insurance likely covers repair costs and medical bills. However, it does not cover the work itself.
A car in the care, custody, and control of an auto shop is the responsibility of the auto shop. Garages can get a garage liability policy with garagekeepers coverage to pay for claims over accidental damage to cars in their care.
Auto dealers typically need the same insurance that other businesses need, like commercial property, general liability, and workers’ comp. However, most will also have garage liability and garagekeepers insurance. Dealers with open lots may also need coverage for wind and hail damage.
Bottom Line
Businesses in the automotive industry need to consider garage liability insurance because it protects businesses if someone claims that their operations caused injury or property damage. Many business owners need the additional coverage of garagekeepers to handle damage to customer vehicles left in their care.
Next Insurance makes it easy to customize the level of coverage to fit the size of your business. A quote is available within minutes, online, for same-day coverage.
