Imagine owning an auto repair shop, where cars come in for everything from simple oil changes to complex engine overhauls. Your team works hard daily to deliver top-notch service, ensuring every vehicle is in better shape than it arrived.
But amidst the hum of machinery and the clink of tools, there’s an ever-present risk: a single accident could lead to a costly lawsuit. So, auto repair business insurance coverage is crucial whether you’re a specialized repair shop or a full-service maintenance provider.
Here is a guide on auto repair insurance and what to expect from them.
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What is Auto Repair Shop Insurance?
These insurances protect against various liabilities faced by workshop owners. These liabilities commonly include:
- Customer Slips and Falls
- Damages to Vehicles
- Mechanic Slip and Falls
Who Can Use Auto Repair Business Insurance?
Any auto repair business with a physical workshop or location offering repair and maintenance services can utilize the insurance.
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According to a study, the average cost of full coverage car insurance in the U.S. in 2024 will be $1,984 per year or about $165 per month.
What Kind of Insurance Does an Auto Repair Shop Need?
There are various types of insurance, especially for the auto repair business. However, there are some common ones that every automotive repair shop owner must have. Here are the common insurances:
- General Liability Insurance
- Errors and Omissions
- Commercial Property Insurance
- Worker’s Compensation Insurance
- Cyber Liability Insurance
What Does a Workshop Insurance Policy Cover?
Workshop liability covers incidents caused by the workshop. For example, a mechanic testing a customer’s car can be covered. If the mechanic hits another vehicle, the insurance pays for the damage to that vehicle. However, the customer’s customer’s car is not covered by this insurance.
Property and Equipment Insurance
This policy protects the shop’s space and special equipment. These are the instances when this policy comes in handy.
According to information on Insurify, car insurance premiums have risen by 7% in 2024.
6 Most Important Types of Insurance
Sometimes, vehicle repairs can be tricky. Based on customers’ driving habits, automotive repair shop owners face unpredictable factors. Some of the factors are:
- ADAS
- Model of Vehicle
- Modern Technology
Here are some types of auto repair shop business insurance for auto service & repair every auto business needs:
1. Worker’s Compensation
It is an insurance that provides workers cash benefits and medical care. It is claimed in cases where a worker is injured or becomes ill as a direct result of their job.
2. Workshop Keeper’s Insurance
It is a policy that auto businesses use to protect clients’ vehicles entrusted to a workshop for service or repair. The standard vehicles are:
- Cars
- Trucks
- Motorbikes
This insurance covers the customer’s vehicle and any damages that happened to it from:
- Sudden Fire in the Service Bay
- Stolen Vehicle from Shop Outside of Business Hours
3. General Liability Insurance
This insurance covers medical expenses and attorney fees resulting from bodily injuries and property damage for which the workshop is legally responsible.
If a customer slips on the recently mopped workshop floor and no signage is displayed to warn, the customer can sue the business.
The shop will pay the customer’s hospital bills if the workshop lacks general liability insurance.
4. Commercial Property Insurance
This insurance comes into play when there is potential damage to the auto repair shop. This insurance protects the workshop’s physical assets from:
A single incident can forever affect the business. Unexpected scenarios can arise, which is why having this insurance is imperative.
5. Loss of Income Insurance
This policy is for emergencies and covers both auto workshop owners and employees. This insurance helps pay for the specific expenses covered in the policy. It involves:
- Payroll
- Taxes
- Mortgage Payments
If a workshop is inoperable for a month or two, the employees are left out of work for that period. To compensate them under specified criteria, automotive workshop owners can cover the loss of income.
6. Commercial Auto Insurance
It is business insurance for auto service repair that applies to automobiles owned or used by a company that protects your business against liability.
This means auto repair shop owners may require commercial auto insurance if they drive a company or personal vehicle for business purposes.
It covers liability for damages caused by accidents involving workshop autos and provides specific compensation to occupants of business autos injured in accidents.
These are the three coverages that most standard commercial insurance offers:
- Physical Damage Insurance
- Commercial Auto Liability Insurance
- Other Coverage
Physical damage insurance includes collision and comprehensive coverage. Commercial auto liability insurance includes property damage and body injuries. Other coverage includes towing, labor costs, medical payments, reimbursement for rentals, lease gap coverage, and auto loans.
According to Value Penguin, across the U.S., the average car insurance rate is expected to increase by 13% in 2024.
What Factors Can Affect Insurance Costs?
Here are some of the main factors that affect small business insurance for auto repair shop:
Type of Coverage
A small auto repair business owner can get the lowest-tier insurance. However, as the shop grows and more customers visit, customer complaints are more likely to increase. The chances of being sued also increased.
Insurance Rates
The safest bet is to purchase insurance from a reputable company. It may be expensive, but there are fewer chances of being scammed.
However, it is better to get multiple rates from different companies. Moreover, auto repair business owners should bargain slightly to bring down the initial quote.
Total Assets Insured
The auto repair business insurance cost changes based on the number of assets covered under the policy. As the number of assets increases, the price goes up.
Auto Repair Management Software
Other than insurance, there is another thing that every automotive repair business owner must have. It’s auto repair shop management software. The software helps regulate the workflow and keep operations in order. This way, there is less chance of accidents and incidents in the shop.
Here are the features that help the auto business owners:
- Invoicing
- Schedule
- Appointment
- Estimate
- Digital Vehicle Inspection
- Repair Order
Conclusion
Running an auto repair business comes with its fair share of risks, but having the right auto repair business insurance coverage can provide peace of mind and financial protection. Various insurance options are available for businesses in the automotive repair industry.
FAQs
What Factors Can Affect Insurance Costs?
Several factors can influence the insurance cost for an auto repair shop, including type of coverage, insurance rates, and total assets insured.
What Kind of Insurance Does an Auto Repair Shop Need?
Auto repair shops typically need several types of insurance, including general liability insurance, errors and omissions insurance, commercial property insurance, worker’s compensation insurance, and cyber liability insurance.
