Auto Repair Shop and Mechanic Insurance

The cost of mechanic and auto repair shop insurance depends on the size of your business, the services you provide, and the level of risk involved in your daily operations, as well as:

• Business type: Insurance costs vary based on whether you operate an auto repair shop, body shop, dealership, or tire and brake shop. Higher-risk operations generally pay more for coverage.
• Value of your business property: Expensive tools, diagnostic equipment, lifts, paint booths, and other property can increase the cost of commercial property coverage.
• Business size and revenue: Larger businesses that service more vehicles and generate higher revenue typically have greater exposure to claims and often pay higher premiums.
• Location: Insurance rates can vary based on local property values, crime rates, weather risks, and the legal environment in your area.
• Customer vehicle exposure: Shops that store, test drive, or service customer vehicles often need more garage keepers coverage, which can affect insurance costs.
• Garage operations: Operating a physical garage with multiple service bays, hazardous materials, or specialized repair services may increase premiums.
• Number of employees: Businesses with more technicians and staff generally pay more for workers' compensation and other insurance policies.
• Policy limits and deductibles: Higher coverage limits provide more protection, but typically increase premiums, while higher deductibles can help lower insurance costs.
• Claims history: Businesses with a history of insurance claims may face higher insurance premiums than those with a clean record.

If you work on, store, tow, or test-drive customer vehicles, general liability insurance alone may not provide enough protection. Most auto repair businesses need both garage liability insurance and garage keepers insurance to cover the risks that come with handling customers' vehicles.

• Garage liability insurance helps cover third-party injuries and property damage related to your garage operations. For example, it can help pay for legal costs if a customer slips and falls at your shop.
• Garage keepers insurance protects customer vehicles while they are in your care, custody, or control. It can help cover damage to a customer's vehicle caused by an employee, a collision during a test drive, theft, vandalism, or other covered events.

Garage keepers coverage is especially important for auto repair shops, towing companies, and mobile mechanics. Without it, damage to a customer's vehicle may not be covered.

When applying for coverage, be sure to accurately describe your operations. For example, insurers may need to know if you work on electric vehicles (EVs), provide towing services, offer mobile repairs, or store customer vehicles overnight. Sharing these details upfront can help ensure you have the right coverage for your business.

Because garage liability and garage keepers insurance cover different risks, many auto service businesses carry both policies.

Mechanics should consider the following insurance products, which cover other risks you might encounter:

• Product liability insurance helps protect your business if a part or product you install is faulty and causes injury or property damage, such as a defective brake pad or air filter that leads to an accident. It’s often included with general liability insurance.
• Errors and omissions insurance (E&O), also called professional liability insurance, covers claims related to professional mistakes or service failures. For example, a customer could sue if a brake job was done incorrectly and later failed, or if a vehicle was misdiagnosed and the wrong repair led to additional damage.
• Hired and non-owned auto (HNOA) insurance helps cover liability if you or your employees drive personal or rented vehicles for business purposes. It can help protect your business if an employee gets into an accident while picking up parts or test-driving a customer vehicle.
• Business interruption insurance is often included in a business owner's policy (BOP), which covers lost income and other costs when your shop is forced to close temporarily due to a fire, storm, or other covered property claim. This policy is also known as business income insurance.
• Equipment breakdown coverage can be added as an endorsement to your commercial property insurance or BOP. This type of insurance covers expenses when your auto repair equipment or machinery suffers a malfunction or mechanical failure.
• Commercial crime insurance, also referred to as fidelity insurance, financially protects your business from criminal acts committed by employees against clients, such as an employee stealing from a customer. Your policy would reimburse the client for the amount that was stolen. One type of commercial crime coverage is a surety bond, which some clients may require before working with you.
• Employment practices liability insurance (EPLI) safeguards your business if you're sued by an employee over wrongful termination or another violation of employee rights. EPLI can often be added as an endorsement to a general liability policy or business owner's policy.

It's easy to find cheap insurance for auto repair shops, auto detailing companies, and car washes that matches your unique business needs and budget. One way is to review coverage options from different insurance carriers, and with Insureon's easy online application you're able to get free quotes from several insurance companies.

There are a few other ways car repair business owners can save on insurance coverage, such as:

• Bundle policies. The most popular option is a business owner's policy, which pairs your general liability insurance policy with property insurance to save money.
• Customize coverage. You can choose lower limits, a higher deductible, or certain exclusions to save on your premium.
• Focus on safety. Fewer accidents mean fewer liability claims, which helps lower your insurance costs.

Whether you’re exploring how to start a mechanic shop or already running a successful auto repair business, the right insurance coverage will help protect your shop, employees, and customers.