A basic garage liability insurance policy covers accidents at the shop such as slip and falls and faulty workmanship. A common example we have experiences is when a customer slips and falls on split oil while walking through the repair shop to talk to inspect his vehicle. The insurance company will pay for medical expenses up to the policy’s per occurrence limit. Most garage liability package policies also include coverage for faulty work caused by things like not tightening lug nuts correctly causing the wheel to come off when the customer drives down the street. The shops insurance carrier would now have to pay for the damages to the auto caused by the accident along with any bodily injury claims for the passengers.
Auto liability is the second part of the package. If employees drive company vehicles off the premises that you own to go pick up parts or drop off a customer and causes an accident you insurance carrier would pay this claim of your auto liability limit. On the flip side if you employee is driving a customer auto in the course and scope of repairing the auto and causes and accident the liability portion of the garage liability policy would pay.
The third portion of a typical shop package policy is your garage-keeper’s liability insurance. This portion pays for the physical damage to a vehicle while it is in your care, custody or control. A good example, is when a customer’s car is being charged overnight and the battery explodes causing the car to catch fire while it is inside or outside the shop. This policy will also cover employees while they are test driving to diagnose what is requiring repair or to test drive once the repair is complete. There are different levels of coverage depending on the shop specific needs. Some shops have direct repair contracts with insurance carriers or local municipality’s that have very specific requirements to cover customer autos for acts of god on top of what you are legally liabile for at the time of loss.
Garage Liability, Auto Lability and Garage Keepers Legal Liability are the basic necessities of what a shop owner needs to operate and cover bodily injury and property damage to a customer auto. Other items that can be included in the package would be property coverage for the structure of the shop along with company owned tools, furniture, fixtures and inventory such as oil, belts, paint and tires. Typically the portion of your premium attributed to property is only 20-25% of your overall premium so its relatively inexpensive so make sure you take a good inventory annually and review with your agent to make sure you limit for the upcoming year will reflect purchases over the past year.