Business Insurance for Auto Repair Shops and Mechanics

General liability insurance covers accidental damage to customer property—but that doesn't include customers' cars, or hazardous worksites like a garage.

Fortunately, there are two policies you can buy to cover these exclusions:

• Garage keepers insurance covers accidents that damage customer vehicles at your repair shop. It'll pay for financial losses caused by fire, theft, vandalism, or even a collision during a test drive.
• Garage liability insurance extends the protection of general liability insurance to your business's garage. If a customer slips in a puddle of oil, this policy will pay for any medical bills or repair costs, such as a smartphone that breaks in the fall.

Auto repair shops often invest in additional insurance policies as part of a comprehensive risk management plan.

Here are some other types of coverage to consider:

• Product liability insurance: Also called products-completed operations insurance, this policy pays for harm caused by your products or services. For instance, it would cover costs if a defective part installed by your shop caused an auto accident.
• Errors and omissions insurance (E&O): E&O insurance covers legal costs if a customer sues your repair shop over alleged negligence, such as failure to replace an oil cap that leads to engine damage. It's also referred to as professional liability insurance.
• Business interruption insurance: A business interruption policy covers lost income and operating costs if your business is forced to close temporarily due to a fire or extreme weather. It's also called business income insurance.
• Equipment breakdown coverage: This policy covers financial losses if a crucial piece of equipment fails unexpectedly, causing your repair shop to lose money.
• Business personal property (BPP) coverage: BPP insurance covers tools, cash registers, and other items kept at your main business address. You can add it as a rider to your general liability policy.
• Tools and equipment insurance: This policy covers your tools and equipment wherever you take them, including in transit or stored off-site. It's a key policy for mobile mechanics.
• Commercial crime insurance: Crime insurance comes in several forms. You can buy it with your commercial property insurance or BOP to protect against crimes committed against your business, or you can buy a fidelity bond to reimburse customers in the event of employee theft.
• Employment practices liability insurance (EPLI): An EPLI policy pays for legal costs related to violations of an employee's rights, such as an accusation of discrimination or unfair termination.

Mechanic business insurance often costs more due to the unique risks of your work, but fortunately there are ways to save as well.

Here are four ways to reduce your insurance premiums:

1. Pay the full annual premium. Insurance companies usually offer a discount when you pay the full annual premium, as opposed to monthly payments.
2. Bundle policies for a discount. Small business owners can often bundle insurance policies to save money. The most popular option is a business owner's policy, which bundles general liability coverage and commercial property coverage.
3. Reduce your risks. By focusing on workplace safety and security, it's possible to avoid incidents and claims—which helps keep your premium low.
4. Customize your policy. You can choose lower limits or a higher deductible on a policy to reduce your premium, and opt out of unnecessary coverage options like comprehensive coverage.