If your business is about providing auto repair, body shop, or other auto-related services, you know mistakes can be very costly.  Although it is completely normal to make mistakes, especially since we’re all only human, when it comes to the auto repair industry, there are plenty of no-no’s. 

No matter how good your technicians or mechanics are, mistakes can and will happen at some point. One problem with making mistakes in the auto industry is that it can be very costly. At the same time, it is unacceptable for customers to pay for service mistakes. When a consumer decides to take their business elsewhere, it means that a lifetime of business just walked out of your door. 

Whatever automotive service you provide, you need business insurance to protect your assets from the risks associated with working mechanical magic or making repairs on people’s vehicles as any kind of error, injury, or damage can result in a costly claim or lawsuit. Garage Liability and Garage Keepers insurance may not be enough since it only has the minimum coverage to keep your business legal and can still leave open exposures for mechanic/technician errors. 

To help you better understand what a standard Garage Liability and Garage Keepers insurance coverage offers, we have defined them for you.

Garage Keeper Liability is an optional but recommended coverage for business owners that stores customers’ vehicles. The goal of this coverage is to offer you protection against damages caused to your customer’s vehicle while in your possession. Garage Keeper’s Liability is needed because it covers what garage liability excludes – autos in the business’ care, control or custody.

It does not cover damages that resulted from faulty workmanship, parts, or insufficient warranties. Basic garage keeper’s liability insurance also excludes coverage for the contents of your customers’ vehicles, such as things found inside their glove box or trunk and any non-factory stereo equipment.

You can, however, add an endorsement to your Garage Keeper’s policy to extend the coverage to personal property kept inside your customers’ vehicles. Garage Keepers’ liability insurance is usually sold with a garage liability policy, but it’s still a separate contract.

What is the difference between Direct Primary and Direct Excess?

Without a Direct Primary or Direct Excess, the claimant (customer) must prove that the loss was due to the garage owner’s negligence in order to be paid under the garage keeper’s coverage. Since garage keeper’s liability covers physical damages, deductibles apply to covered losses.

The difference between direct primary coverage and garage keeper’s legal liability is that garage keepers provides coverage to a vehicle damaged due to the insured owner’s negligence and direct primary covers the vehicle regardless of fault unless it is specifically excluded by an endorsement.

Before purchasing an Errors & Omissions policy, here are some factors you should consider:

• Level or risk exposure – Are you garage owner and the sole technician, or do you have multiple technicians and mechanics working in the shop? What is the experience level of the technicians and mechanics working in the garage? Are certifications required?

• Types of vehicles the garage services – Do you service exotic and/or luxury vehicles whose parts are costlier to replace?

• Size of business operation –  What is the business volume of the garage? Can your business survive a loss if there’s no coverage?