What is the difference between garage keepers vs. garage liability insurance?

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Garage keepers and garage liability policies cover different types of risks for auto servicing businesses. You may need both policies to financially protect your business.
Garage mechanic working on a customer's vehicle.
Any business that involves the maintenance or storage of customer vehicles on its property faces unique risks, such as damage or theft of a customer's property or someone injuring themselves on the premises. Garage liability and garage keepers insurance cover very similar but unique risks.

What is garage liability insurance?

Garage liability insurance is a type of general liability insurance that’s designed for the unique risks faced by garage-based and auto service businesses.

For most businesses, general liability coverage insures against common business risks, such as a customer bodily injury at your business property, plus damage to a customer’s property and accusations of advertising injury.

A general liability insurance policy typically excludes these risks from businesses that sell, store, and service vehicles as part of their business operations. This includes car dealerships, service stations, body shops, oil change shops, tow truck operators, and parking garages.

Garage liability, also known as garage insurance, covers the unique liability exposures that auto servicing businesses face. This type of coverage includes:

  • Customer injuries and related medical bills
  • Physical damage to a customer’s property at your business (but not their vehicles on-site for service)
  • Products-completed operations insurance, in case a customer claims they were physically or financially harmed because your business used defective parts or made a faulty repair
  • Legal defense costs for any of the above, including settlements and court-ordered judgments

What is garage keepers liability insurance?

Garage keepers liability covers the damage or theft of a customer’s vehicle while it’s on-site at your business and under your care, custody, and control.

Also known as “storage location insurance” and “garage liability coverage,” this type of insurance covers damage to vehicles kept in a covered location, such as a parking garage, or while it’s being serviced at locations such as auto repair shops, auto dealers, or car washes and detailers.

If a customer’s car were damaged by fire, vandalism, or stolen, your garage keepers insurance coverage would protect you from a financial loss.

Even if the customer had comprehensive coverage and filed a claim with their personal auto insurance, their own insurance company could blame you for the loss and expect your business to pay.

There are two types of garage keepers coverage:

  • Direct primary garage keepers insurance automatically covers a loss, regardless of whether your business is legally obligated to do so.
  • Legal liability garage keepers insurance pays for a claim if you are found legally responsible for a loss.

Direct primary coverage is more expensive than legal liability. A key reason for choosing direct primary coverage is it can make your customers happier to quickly resolve a claim, rather than dealing with lawyers and a possible lawsuit over who was at fault for a vehicle’s theft or property damage.

Find insurance policies for auto service businesses.

What is the difference between garage insurance and general liability insurance?

General liability insurance covers common business risks for most businesses, such as a slip and fall accident from a customer that results in an injury, although it excludes this coverage from auto servicing businesses and garage operations because they’re considered higher risk.

Garage liability insurance covers the same risks as a general liability policy, although it does not exclude such risks when covering car shops, towing services, parking garage owners, and similar businesses that service and keep vehicles on premises as part of their business operations.

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Best general liability insurance for small businesses

When buying commercial general liability insurance, not every provider offers the same coverage and support. Find the best insurance company for your type of business, your budget, and your geographical area.

Do I need both garage keepers coverage and garage liability insurance?

Just as most small business owners buy general liability insurance, you may need a garage liability policy to cover the risks of owning a garage business that deals with the public on a regular basis.

If a customer is injured while visiting your property, or accuses your business of a faulty repair that causes them harm, you could wind up with an expensive lawsuit. A garage liability policy could reduce the financial impact of such a claim.

Any business that stores other people’s vehicles on its property should also consider a garage keepers policy. Imagine the financial impact on your business if the customer vehicles kept on your property were stolen or vandalized. It’s the kind of financial loss that garage keepers insurance is meant to cover.

Find garage liability or garage keepers insurance with Insureon

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

Mike Mosser, Content Specialist

Mike spent several years as a reporter and editor covering politics, crime, and the world financial markets. He’s worked for several newspapers, a financial newswire, and a monthly magazine. As a copywriter, Mike has produced SEO-based content, marketing, public relations, and advertising work for a variety of companies.

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