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Workers’ compensation insurance for auto services and dealers

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Workers' compensation insurance

Workers’ compensation insurance covers medical costs and lost wages for work-related injuries and illnesses. This policy is required in almost every state for businesses that have employees.

Workers’ compensation protects employees at your automotive business

Even if you’ve taken precautions, you can’t protect your employees from every accident. From slipping on a slick service floor at a repair shop to being clipped by a vehicle at your gas station, a single injury can be financially crushing for a small business.

When an employee is injured, workers’ comp can cover medical expenses, partial wages during recovery time, and more.

Workers’ compensation can help pay for an injured employee’s:

  • Immediate medical costs, such as an ambulance ride
  • Ongoing medical costs, such as physical rehabilitation
  • Partial lost wages while the employee is unable to work

Workers’ comp protects auto service business owners

Almost always included in a workers’ comp policy, employer’s liability insurance offers protection when a gas station attendant, mechanic, or other auto service employee decides to sue a business owner over an injury.

Employer’s liability insurance can help cover:

  • Attorney’s fees
  • Court costs
  • Settlements

Even if a lawsuit is frivolous, you could end up paying out of pocket for a costly legal defense. Employer’s liability insurance, however, does have limits on how much it will pay for a lawsuit.

How much does workers' comp cost for auto services and dealers?

The amount you pay for workers’ compensation is a specific rate based on every $100 of your business’s payroll. Your premium is determined by the type of work done by your employees (classification rate), your experience modification rate (claims history), and your payroll (per $100).

The formula is:
Classification rate x Experience modification rate x (Payroll / 100) = Premium

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State laws set workers’ comp requirements for automotive businesses

Each state creates its own laws for workers’ compensation requirements. For example, gas stations in New York must carry workers’ compensation insurance for their employees – even part-time workers. However, Alabama gas stations are only required to carry workers’ compensation when they have five or more employees.

While self-employed or independent contractors, sole proprietors, and partners don’t have to carry workers’ compensation insurance, you can purchase a policy to protect yourself, too.

Monopolistic state funds

In certain states, auto service businesses and dealerships must purchase workers’ compensation insurance through a monopolistic state fund. Those states are:

If you purchase workers’ comp through a monopolistic state fund, it might not include employer’s liability insurance. However, you can purchase it from a private insurer to fill this gap in coverage.

Lower workers’ comp costs with risk management

Whether your employees repair cars, pump gas, or sell cars, working with vehicles is a risky business. You can make your service station or dealership safer with:

  • Employee safety training
  • Proper equipment, such as gloves and goggles
  • Regular equipment maintenance, including fuel tanks and pumps

Through a safe work environment and risk management, you can reduce the likelihood of an injury. That means less claims – and a lower insurance premium.

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Other important policies for automotive businesses

Workers’ compensation insurance protects your employees and to some extent your business, but it doesn’t cover common risks such as property damage and customer injuries. Other recommended insurance policies for auto services and dealers include:

General liability insurance: This policy can pay legal expenses related to customer property damage and injuries, along with slander and other advertising injuries.

Business owner’s policy: This policy combines general liability insurance and commercial property insurance, usually at a lower rate than if the policies were purchased separately.

Commercial auto insurance: This policy covers vehicles owned by your automotive business. It typically pays for accidents, vehicle theft, vandalism, and weather damage.

Get free quotes and compare policies with Insureon

Are you ready to safeguard your auto service business or dealership with workers’ compensation or another type of insurance? Complete Insureon’s easy online application today. Once you find the right policy, you can begin coverage in less than 24 hours.

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