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 ever more popular electric vehicles are major concerns garages face. Your auto repair shop insurance requirements are unique, and your insurance professional should be well versed in your sector. Policies tailored to your specific 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 the most essential of business coverages. It helps with investigation, settlement and defense costs for a variety of negligence allegations. These can include bodily injury and property damage. Your CGL is your front-line defense against financial loss due to injury or damage to people visiting your premises.

Your CGL can also offer protection for an 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, your mechanic may strip an oil plug while changing a customer’s oil, resulting in a blown engine. A brake repair failure or damage to a battery pack can result in an injury and expensive claim. Even a customer’s mere allegation of 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, consider a vandalism or theft where your client’s vehicle is damaged or stolen while in your care. To keep your customer’s goodwill, you may want your garage insurance to step in as the primary policy, paying instead of your client’s insurance. Garagekeepers insurance can offer primary coverage that pays regardless of your negligence.

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

Commercial Auto Insurance

With the cost of automobiles rising quickly, you’ll need strong protection for your company’s vehicles. Business auto liability insurance covers claims made by others that your employee caused an accident resulting in financial loss or property damage. If your employee drives his or her own vehicle on an errand, you’ll need protection there as well. Non-owned auto coverage provides an excess layer of auto liability coverage over the limits your employees carry on their vehicles.

Your tow trucks generate income, as do your mobile-mechanic trucks. An endorsement to your business auto policy can help smooth out income and extra expense costs caused by damage that puts your vehicle out of service.

You’ll want to consider the following coverages for your auto repair shop.

• Liability insurance – Helps with costs if your driver causes bodily injury or property damage to others.
• Medical payments – Helps with medical bills for your guest passengers regardless of your driver’s fault.
• Physical damage coverage – Helps pay for collision damage, overturn, or vandalism incidents 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 client’s vehicle 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/or materials and can be written to insure against lost income and expenses of temporary measures if a covered loss causes the closure of your facility.

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

If you operate mobile equipment for auto 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 tools their personal tools they use at work. Make it clear to 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. Battery-operated vehicles, according to MarketWatch, are set to be “one of the biggest new sources of pollution.” By 2030, the International Energy Agency predicts 145 million electric vehicles throughout the world. This prediction does not include two- and three-wheeled vehicles.

EVs’ lithium-ion batteries are highly flammable. If disassembled incorrectly, they can explode. The average EV battery pack weighs 550 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, for example, fluids that leak from vehicles 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 repair, you’ll need protection for these exposures, as well.

Additionally, you may have underground storage tanks to consider as well as a pollution possibility from leaking grease traps or hydraulic equipment or the spread of cleaning solvents. Environmental insurance covers investigation, settlement and legal defense costs.

Workers’ Compensation Insurance

Workers’ compensation insurance helps with the costs of medical treatment, physical rehabilitation, and the injured worker’s lost wages. In most states, it also protects your company from lawsuits stemming from the injury. Be sure to discuss the payroll status of all people working for you. Some shops allow independent contractors to use a bay and don’t include them as employees. But depending on your contract with those mechanics, the law might consider them your employees, requiring workers’ comp coverage.

Other Considerations

There are some insurance programs and policies that bundle coverages most needed by auto repair shops. These are tailored for your industry and can be added to with policies, such as workers’ compensation, that are not included. They can be attractive for small businesses because of pricing and convenience.

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