Tune Up Your Auto Repair Shop Insurance

Safety challenges and the potential for substantial financial loss are increasing for service stations and auto repair shops. The escalating cost of used cars and the risks associated with repairing electric vehicles are major concerns garages face.

Your insurance requirements as an auto repair shop are unique, and your insurance broker should be well-versed in your sector. Policies tailored to your needs are available and affordable.

Let’s look at some of the most important coverages for your auto repair business.

Commercial general liability insurance

Even if you prohibit customers in your repair bays, injuries can still occur on your premises. Commercial general liability (CGL) insurance is essential. CGL is your front-line defense against financial loss due to injuries or damage to people visiting your premises. It helps with investigation, settlement and defense costs for various negligence allegations. These can include bodily injury and property damage.

CGL can also offer protection for advertising or personal injury. For example, competitors may allege your ad or image infringes on their copyright.

Garage liability insurance and garagekeepers liability

Auto repair and collision repair shops can face allegations of negligence arising from repairs. For example, imagine your mechanic strips an oil plug while changing a customer’s oil, resulting in a blown engine. Or say a brake repair failure or damaged battery pack causes an injury, resulting in an expensive claim. Even a mere allegation of a brake failure can lead to an expensive investigation involving mechanical engineering experts. Your garage liability policy can help protect your assets in these types of incidents.

Many times, damage to customers’ vehicles is not your fault. For example, a client’s car can be vandalized or stolen while in your care. Garagekeepers insurance can offer primary coverage that pays regardless of your negligence.

Your broker can explain garage insurance options so you can decide how you want the insurer to manage these types of claims.

Commercial auto insurance

With the cost of cars rising quickly, you need strong protection for your company’s vehicles. Any vehicle that generates income, such as tow trucks and mobile mechanic trucks, has to be insured under your business auto insurance.

Business auto liability insurance covers you if an employee causes an accident resulting in financial loss or property damage. If your employees drive their own vehicles on company errands, you’ll also need protection for that. Nonowned auto coverage provides an excess layer of auto liability coverage over the limits your employees carry on their vehicles.

Make sure you have the following coverages.

• Liability insurance: Helps with costs if your driver causes bodily injury or property damage to others.
• Physical damage coverage: Helps pay for collision damage, overturns and vandalism to your vehicles.
• On-hook coverage: Once you hook to a client’s vehicle, you can become legally responsible. On-hook coverage can pay for damage to your clients’ vehicles while in tow.

Commercial property insurance

Whether you own or lease your facilities, you’ll likely need help paying for damages to your building or business personal property. Commercial property insurance covers your buildings and materials. It can be written to insure against lost income and temporary expenses if a covered loss causes your facility to close.

If you’re in a flood or an earthquake zone, you can get a stand-alone policy for floods or earthquakes. Or you can add an endorsement to your property policy to provide coverage.

If you operate mobile equipment for repairs, you’ll want to consider inland marine insurance to protect your valuable tools and equipment. It may also be a good idea to provide employee tools coverage, which protects your employees’ investment in the personal tools they use at work. Clarify for your mechanics if you don’t offer this protection, because they may want to buy personal insurance coverage at that point.

Electric vehicles generate increased pollution risks

Car repair shops know about the pollution hazards of oil and gasoline, but electric vehicles (EVs) are a growing concern. According to the business news website MarketWatch, battery-operated vehicles are set to be “one of the biggest new sources of pollution.” The International Energy Agency predicts 145 million EVs will be in use globally by 2030. This prediction does not include two- or three-wheeled vehicles.

EVs’ lithium-ion batteries are highly flammable. If disassembled incorrectly, they can explode. The average EV battery pack weighs 1,000 pounds. Risks of working on these vehicles include migration of lithium into water supplies and soil adjacent to your worksite.

Pollution coverage for auto repair shops is necessary. While your CGL generally covers you if fluid leaks from a vehicle after an accident, you’ll need specialized coverage for other types of site pollution and cleanup.

Site pollution liability coverage can help with costs if a spill occurs on your premises. However, if you offer mobile repairs, you’ll need protection for these exposures as well.

Additionally, you may have pollution from underground storage tanks, leaking grease traps, hydraulic equipment or cleaning solvents. Environmental insurance covers investigation, settlement and legal defense costs.

Other considerations

Some insurance programs and policies bundle the coverages auto repair shops need the most. You can add other policies, such as workers’ compensation, that are not included. They can be attractive for small businesses because of pricing and convenience.

No matter what kind of coverage you choose, keep your insurance agent or broker updated as you expand or pursue new income streams. With emerging challenges such as EVs, you’ll need the right insurance. An insurance professional versed in the auto repair sector can guide you on the right insurance and risk management practices to help your business thrive.

This content is for informational purposes only and not for the purpose of providing, financial, medical or legal advice. You should contact your attorney, doctor, broker or advisor to obtain advice with respect to any particular issue or problem. Read more about our limitation of liability here.