Garage keepers insurance falls under a garage policy held by auto dealers, body shops, and repair shops. It provides them with liability protection in the event that a customer’s car is damaged while in the garage’s possession for repairs, bodywork, or storage.

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Garage Keepers Insurance Quote

Do You Need Garage Keepers Insurance?garage keepers insurance

Garage keepers Legal Liability coverage is an optional coverage designed for business owners who offer towing services or operate auto repair or  service stations. It protects a customer’s vehicle when you are keeping it at a covered location for parking or storing, or to perform service.

Garage keepers Insurance coverage is for you because it protects you when you are storing customers’ vehicles from the following perils:

  • Fire
  • Theft
  • Vandalism
  • Collision

If your business regularly takes custody of a customer’s vehicle, you take on a significant amount of risk. Therefore, it’s your duty to make sure that your business is covered with a garage keepers insurance policy. Businesses that regularly do so include:

  • Body shops
  • Car dealerships
  • Custom shops
  • Detailers
  • Electronics installers
  • Interior detailers
  • Oil change servicers
  • Parking garages and lots
  • Repair shops
  • Service stations
  • Smog test and emissions tests shops
  • Tow truck operators
  • Valet services
  • Windshield and window installers

How Much Does Garage Keepers Insurance Cost?

Garage keepers’ insurance premiums often depend on multiple factors, such as:

  • Your business’s location (e.g. state, near a major highway, etc.)
  • The types of vehicles your business services
  • The average number of vehicles you service per day

Per Cover Wallet, a garage keepers’ insurance policy costs on average between $1,000 and $3,000 yearly. Of course, it’s always important to carefully assess the specific needs of your business before acquiring garage keepers’ insurance coverage.

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What Does Garage Keepers Insurance Cover?

Depending on the needs of your business and the types of associated risks, the exact coverage levels of a garage keepers insurance policy may vary. However, a standard garage keepers policy typically includes three primary types of coverage:

Legal Liability

Legal liability is a type of coverage that is most often included in garage keepers’ insurance policies. This protects customer vehicles following damages that result from carelessness by the insured party (your business).

For instance, legal liability coverage would help pay for damages that occur after one of your employees tries to fix (or test drive) a client’s car. By law, this employee would be responsible or “liable” for the damage.

Direct Primary

Direct primary coverage protects customer vehicles regardless of who is at fault for damages. In the event of a loss not caused by the insured (e.g. losses due to theft or weather-related incidents), direct primary coverage will pay for said loss. Following incidents of theft, customers have no need to file claims and can rest assured that their vehicles are always protected.

Direct Excess

Garage Keepers Insurance - (2022) Cost and Coverage 1Direct excess coverage isn’t always offered in garage keepers’ insurance policies but can be extremely useful in some cases. Similar to direct primary, this coverage protects an insured party from losses to customer vehicles no matter who is liable.

However, direct excess is different from direct primary coverage because if an insured isn’t responsible for a loss, it will pay for damages above the policy’s coverage limits. Direct excess is most helpful in cases where customer vehicles sustain severe damages due to unprecedented events. For instance, should a fire destroy both a customer’s truck and your automotive business and the former carries comprehensive coverage for his vehicle, direct excess may help pay for any damages above the limits of the customer’s policy.

As with almost every other type of insurance policy, garage keepers insurance doesn’t provide your business with carte blanche protection from all types of risk. There are several damages that won’t be covered and several coverage exceptions. These include:

  • Faulty workmanship
  • Contractual obligations with a service station or dealer
  • Vehicle theft by an insured
  • Loss of stereo equipment that’s not permanently installed
  • Radar detection equipment
  • Defective parts
  • Personal items of the client that were left in the vehicle

What are the “limits” of a Garage Keepers Liability insurance?

Keep in mind that not everything is covered by Garage Keepers Liability insurance. It does not protect damages caused by faulty workmanship or insufficient warranties. Contractual obligations are equally not covered along with defective parts and if the vehicle is stolen by the insured.

All contents present in your customer’s vehicle are likewise subject to exclusion. This includes the following but not limited to:

  • Stereo equipment that is not permanently installed
  • CDs, DVDs and trunk/compartment items
  • Telephone, mobile radios, and scanners unless permanently installed
  • Radar detection equipment

If you want to extend your Garage Keepers Liability coverage to include personal client items in the protection, there is an option to incorporate it into the endorsement policy as an act of goodwill.

From repair shops to body shops, many small business owners get confused about garage keepers liability and garage liability insurance policies. Naturally, many assume that they are one in the same, but they are not.

For starters, their protection and their coverage differs. How so?
Well, you know now that garage keepers is a unique policy that protects a client’s vehicle while they are in your custody from four main perils:

  • Fire
  • Theft
  • Vandalism
  • Collision

Garage liability, on the other hand, protects your business from general liability issues that may come up during your garage business’ daily operations. It often acts as a blend of commercial auto insurance and general liability insurance. It usually covers the following types of damages:

  • Third-party injuries
  • Third-party property damage
  • Liability costs
  • Structure repair

Put simply, garage keepers protect the customer’s vehicle from unexpected damages (besides workmanship), whereas garage liability insurance protects the business itself from damages to third parties that occur along the line of duty.

Regulating Agency and References

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