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What is Garage Keepers Insurance?

Garage Keepers Insurance

As a business owner who operates an auto repair business, you know how important it is to have the right business insurance coverage. For most things, the type of insurance you need is like other operations. However, there is one type of coverage you need to consider if you own an automotive repair shop or garage, it’s garage keepers insurance. This type of insurance can protect your business, and your customers in case of accidents or damages to the vehicles in your care. Let’s take a look at what garage keepers insurance is, what it covers, and how you get it.

What is garage keepers insurance?

Just imagine a scenario where someone brakes into your garage and damages a customer’s car, or worse steals it. What if your garage is flooded, or a fire breaks out and all the vehicles in your care and custody were suddenly destroyed? It goes without saying, there would be severe financial harm done to your business.

Garage keepers insurance is a type of insurance policy that provides coverage for damage or loss to a customer’s vehicle while it’s in your care, custody, and control. This type of insurance is specifically designed for businesses that operate garages, auto repair shops, or car dealerships, where customers leave their vehicles for repair, maintenance, or storage.

While other businesses also have customer property in their care and custody, because of the unique risk of caring for automobiles, automotive service businesses need garage keepers liability insurance. This specialized coverage is designed to reduce the risk associated uniquely associated with auto repair shops.

Remember, garage keepers is different than garage liability. Learn more about garage liability insurance.

What types of businesses need garage keepers coverage?

Garage keepers insurance is particularly important for businesses that operate in the automotive industry, as they often store or work on customer vehicles. Some of the specific businesses that may need garage keepers coverage include:

  • Auto repair shops
  • Car dealerships
  • Oil change services
  • Parking garages and lots
  • Valet parking services
  • Towing
  • Car washes
  • Vehicle storage facilities

These businesses have a higher risk of damaging or losing customer vehicles while they’re in their care, custody, and control, which makes garage keepers insurance essential for protecting their financial assets and reputation.

Are there different options for garage keepers coverage?

When buying a business owner’s policy or commercial package, you’ll have the option to add garage keepers coverage. As with other coverage, you can buy more, or less, protection. Here are the most common options you can select:

Legal liability coverage

When you select legal liability coverage you will get coverage when damage to a customer’s vehicle is caused by an employee or is the direct result of your negligence. If instance, if your employee accidentally scratches the paint on a customer’s vehicle during an oil change. Legal liability is the most selected form of garage keepers liability – because it’s less expensive.

Direct primary coverage

Direct primary offers broader protection for your auto repair business. When you have direct primary, you have protection if a customer’s vehicle if it’s damaged, or stolen, regardless of fault. In fact, direct primary also coverers damage from vandalism, weather, and other events. Because it’s broader protection, it does cost more and is selected less frequently than legal liability.

How do I buy garage keepers insurance?

When you purchase a business owner’s policy or commercial package, garage keepers insurance is offered as an add-on for automotive repair classes of business. The business general liability insurance will typically be included in the BOP or package and will contain your garage liability, but the garage keepers are a separate add-on.

Does garage keepers liability cover customer property?

Garage keepers liability is designed to provide the garage owner coverage for damage to the customer’s vehicle while in their care and custody. Therefore, it provides coverage for the vehicle, its engine, transmission, glass, body, and paint. However, it doesn’t provide coverage for the customer’s personal property.

Since customers frequently leave personal property in their vehicle, you might want to consider adding personal property coverage to your garage keepers policy. However, keep in mind this will result in a higher premium.

How much does garage keepers liability insurance cost?

There are some sites that will quote your average costs for business insurance, but these numbers aren’t really helpful. Is your business average? Is it the same average as the company calculating the estimates? What you really want to understand is how an insurance company will determine your premium. The cost of your garage keepers liability insurance is based on several factors, including:

  • Your type of automotive service business your run
  • The location of your shop or garage
  • The types of vehicles you service
  • How many vehicles you have in your care and custody
  • The coverage limits and deductibles you need
  • If you’ve had prior claims

The bottom line

If you own an auto repair business, you’ll need insurance, and that insurance will need to have garage keepers coverage. The good news, you can get it as an add-on to your business owner’s policy or commercial package. If you’re looking to buy business insurance, make sure to work with an insurance agent who understands the risk associated with auto repair and garage operations.

If you don’t have an agent, you can always contact us, or start a quote online.

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