Business Insurance for Auto Services and Dealers

Automotive businesses take on risks outside of those faced by companies in other sectors, like technology or professional services. A customer could trip and cut themselves on a sharp piece of equipment in your auto repair shop, or their vehicle could get stolen from your lot.

Here are the policies that protect your customers and their vehicles:

• Garage liability insurance is a type of general liability insurance designed for the unique risks of automotive repair shops and other businesses that operate a garage. If a customer slips in spilled oil in your garage, it'll cover any legal defense costs resulting from their fall.
• Garage keepers coverage pays for theft or damage that happens to a customer's vehicle in your care, custody, or control. That includes vehicles in a variety of situations, from consigned cars for sale in a dealer's lot to a vehicle being repaired, washed, or detailed by your business.

Mobile mechanics need many of the same types of insurance as traditional auto repair businesses. For instance, they still need general liability insurance to protect against customer accidents, and workers' compensation insurance to pay for medical bills if they're injured on the job.

In addition, you'll want to look into a couple of key policies that are a must for mobile mechanics:

• Commercial auto insurance: Personal auto insurance won't cover business use, which is why you need commercial coverage for the vehicle you drive to customers' homes and businesses. Your state likely requires you to have this coverage as well.
• Tools and equipment insurance: Most mechanics depend on commercial property insurance to cover their building and its contents, but it won't cover items that travel with you. Tools and equipment insurance provides coverage for business property you bring to worksites, including items in transit or stored off-site. It's also called inland marine insurance.

Similar business models, such as mobile car detailers and mobile car washes, benefit from these coverages as well.

Depending on your business's unique risks, you may need additional types of coverage. Small business owners in the automotive industry often invest in the following:

• Product liability insurance: This policy covers harm caused by the products you sell or your completed service. For instance, it would cover financial losses if a defective tire blew out on a customer's car and caused an accident.
• Errors and omissions insurance (E&O): E&O insurance pays for legal defense costs if a customer sues your business over the quality of your work. That includes mistakes, oversights, missed deadlines, and other accusations of negligence.
• Business interruption insurance: If a fire, storm, or other covered property claim forces your automotive business to close temporarily, this policy will pay for lost profits and day-to-day operating expenses until you can reopen.
• Equipment breakdown coverage: Businesses that depend on a specific piece of machinery or equipment buy this coverage to pay for expenses and lost profits if it breaks down unexpectedly.
• Surety bonds: A surety bond reimburses your customers if you fail to comply with regulations or follow through on a contract, though the amount must be paid back to the insurer. One common type is a fidelity bond, which reimburses your customers in the event of employee theft.
• Employment practices liability insurance (EPLI): This policy covers legal costs related to violations of employee rights, such as an accusation of unfair hiring or firing practices.
• Dealer's open lot (DOL) coverage: This type of car dealer insurance pays for losses if a vehicle in your inventory is stolen or damaged by a fire, storm, vandalism, or other incident outside of a collision.

If you're unsure which policies you need, our licensed agents can point you in the right direction or answer any questions you might have.