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Garage keepers insurance

Garage keepers liability insurance offers financial protection for business operations that service and store vehicles. It can financially protect you in case a customer’s vehicle is damaged or stolen while in your care.

Garage keepers liability insurance protects your customer vehicles

Also known as “storage location insurance,” garage keepers liability coverage insures a customer’s automobile while it is in your care, custody, and control, such as securing it in a covered location for parking and storage, or performing service on it.

Imagine how much it would cost if someone broke into your garage business and stole or damaged a customer’s car. Or if a fire broke out overnight and destroyed every customer vehicle at your car dealership. The financial impact on your business would be tremendous.

That’s why so many small business owners who work in vehicle sales, storage, or repairs have garage keepers liability insurance to reduce their risk exposures and have that essential financial protection.

What types of businesses should have garage keepers liability coverage?

Service stations, auto dealers, and garage operations should purchase this coverage, as well as auto repair shops and car washes and detailers.

Other businesses that should consider buying garage keepers liability coverage include:

  • Electronics installers, such as stereo and speaker installation
  • Oil change services
  • Parking lots and garages
  • Emissions tests shops
  • Towing businesses
  • Valet and parking services
  • Windshield repair and installation services
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What are my garage keepers coverage options?

With garage keepers liability insurance, you have several different ways to insure your customers’ vehicles.

Legal liability coverage

Garage keepers legal liability coverage insures you against damage to a customer’s vehicle caused by an employee, such as a cracked car window that happened during standard maintenance. This is the most common type of garage keepers liability insurance.

Per-occurrence limit

The per-occurrence limit is the total amount of coverage you’ll have for every car under your care that is stolen or damaged in a single incident. It’s basically the total cost of damage for one event that your insurance will cover.

Per-vehicle deductible

The per-vehicle deductible is the amount you’d pay out-of-pocket for each vehicle impacted by an event, before your insurance would kick in and cover the rest of the claim.

Direct primary coverage

Direct primary coverage protects a customer’s vehicle if it’s damaged or stolen, no matter who is at fault. This includes damage from vandalism, extreme weather, and other events.

Direct excess coverage

Direct excess coverage is a cheaper alternative to direct primary coverage. It’s like an umbrella policy or secondary coverage, which covers losses that exceed a customer’s personal auto insurance. A direct excess policy only applies to claims for which you are not legally at fault.

For example, if a storm damaged a customer’s vehicle that was on your property, the claim would first be covered by the customer’s own comprehensive auto insurance. Then, your direct excess policy would cover any remaining balance on the claim, up to your policy limit. If the customer didn’t have comprehensive auto coverage, your direct excess policy would cover the claim.

How do I get garage keepers insurance?

This coverage is typically purchased as an add-on to an existing garage liability policy, which is similar to a general liability policy.

General liability insurance offers protection against common business risks such as customer bodily injuries, customer property damage, and advertising injuries. It's purchased by most small businesses.

Garage liability insurance covers these incidents when they are directly related to your garage business operations.

What’s the difference between garage liability and garage keepers insurance?

Garage liability insurance, or "garage insurance," is a type of general liability insurance that protects automotive businesses in the event that an accident harms a customer or damages their property in the course of your business operations. It excludes vehicles under your business's care, custody, or control.

Garage keepers insurance, on the other hand, is an endorsement that fills this gap in coverage. It covers property damage to a customer’s vehicle while it is in your possession.

For example, let's say a customer brings in a vehicle with an unknown mechanical issue, and your mechanic decides to test drive it to see if they can figure out what's going on. During the test drive, the mechanic hits another car on the road, damaging both vehicles and injuring the driver in the other car.

In this scenario, the other vehicle and its driver would be covered by your garage liability policy, which could help pay for any resulting medical bills, vehicle repairs, or legal expenses.

The customer’s vehicle that was being taken for a test drive would then be covered by your garage keepers liability insurance, which would help pay for any expenses related to repairing just the customer's car.

What’s excluded from a garage keepers liability insurance policy?

While garage keepers liability insurance covers the main components of a customer’s vehicle, such as the body and the engine, it does not include personal property within the vehicle. These exclusions include contents in the trunk or glove compartment, stereo equipment and radios, phones, and radar detectors.

You might be able to add personal property coverage to your garage keepers policy, as well, but keep in mind this will result in a higher premium.

Garage keepers insurance also doesn’t cover claims based on a complaint of faulty repair work or defective parts. For example, if a customer accuses your business of a poor repair job, this would not be covered by your garage keepers insurance. In this event, you would need professional liability insurance.

How much does garage keepers liability insurance cost?

Female mechanic holding clipboard considering auto costs.

An insurance company will calculate the cost of your garage keepers liability insurance based on several factors, including:

  • Your type of business
  • The location of your business
  • The types of vehicles you deal with
  • The number of vehicles you typically have on site
  • Your coverage limits and deductibles

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Complete Insureon’s easy online application today to compare insurance quotes from top-rated U.S. carriers. You can also consult with an insurance agent on your business insurance needs. Once you find the right types of insurance for your small business, you can begin coverage in less than 24 hours.

Updated: July 18, 2022
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