Auto Service Repair Shop Insurance Policy Information

Auto Service Repair Shop Insurance. Automobile repair shops offer a wide variety of mechanical services, from engine repair to tune-ups. The operation may be stand-alone or be part of another business such as an automobile dealership or filling station. They may specialize in a specific type of automotive repair, such as transmissions or brakes, or service other types of motorized vehicles, such as snowmobiles or recreational vehicles. Some repair or rebuild parts such as brake drums, or custom-make old, difficult-to-replace parts.
Operations may include gasoline or diesel fuel sales or the retail sales of automobile accessories and tools. Normally, auto repair shops perform body work or painting only when incidental to other repairs.
Additional services can include towing, auto club affiliations, pickup and delivery of customers, and the loan or rental of replacement vehicles. Some will have a mobile unit to perform repairs to stranded vehicles or at the customer's location.
Is your auto shop totally protected from liability? If you own an auto service shop or garage, then having the right business insurance coverage in place makes a lot of sense. Just one lawsuit can really negatively affect your bottom line and leave you holding the financial bag for monetary awards. With a business owner's policy, known as a BOP policy in the insurance world, you effectively mitigate your risks and put your business in a better place for success.
A auto service repair shop insurance business owner's policy can provide you with protection if you find yourself on the receiving end of a lawsuit.
Auto service repair shop insurance protects your garage from lawsuits with rates as low as $57/mo. Get a fast quote and your certificate of insurance now.
Below are some answers to commonly asked auto services & repair insurance questions:
- What Is Auto Service Repair Shop Insurance?
- How Much Does Auto Service Repair Shop Insurance Cost?
- Why Do Auto Repair And Service Shops Need Insurance?
- What Type Of Insurance Do Auto Repair And Service Shops Need?
- How Does BOP Protect Auto Service & Repair Businesses?
- What Are Automobile Service Repair Shops Risks & Exposures?
- What Does Auto Service & Repair Shop Insurance Cover & Pay For?
What Is Auto Service Repair Shop Insurance?
Auto service repair shop insurance is a type of insurance coverage that is designed to protect auto repair shops from financial losses due to accidents, damage, and liability claims.
This insurance typically includes coverage for property damage, liability, and business interruption, as well as coverage for tools and equipment. It may also include coverage for employee injuries and workers' compensation.
The coverage can be tailored to meet the specific needs of the repair shop, and may include endorsements for additional coverage such as pollution liability or professional liability.
How Much Does Auto Service Repair Shop Insurance Cost?
The average price of a standard $1,000,000/$2,000,000 General Liability Insurance policy for small auto repair and service businesses ranges from $57 to $79 per month based on location, size, payroll, sales and experience.
Why Do Auto Repair And Service Shops Need Insurance?

Auto service repair shops need insurance for a variety of reasons. First and foremost, insurance protects the business from financial losses due to accidents, damages, or lawsuits. Without insurance, a single incident could potentially bankrupt the business.
Additionally, auto service repair shop insurance helps to protect the business's employees and customers. If an employee is injured on the job, workers' compensation insurance can cover their medical expenses and lost wages. Liability insurance can also protect the business if a customer is injured on the property or if their vehicle is damaged during the repair process.
Insurance also helps to protect the business's assets, such as tools, equipment, and inventory. If these items are damaged or stolen, insurance can cover the cost of replacing them.
Finally, many businesses are required to have certain types of insurance in order to operate legally. For example, many states require auto service repair shops to carry liability insurance in order to protect against any potential damages or injuries that may occur on the property.
Overall, insurance is an essential component of any successful auto service repair shop. It helps to protect the business, its employees, and its customers from financial losses and legal liabilities, while also allowing the business to operate legally and effectively.
What Type Of Insurance Do Auto Repair And Service Shops Need?
Auto repair and service shops need several types of insurance to protect themselves and their customers. These include:
General Liability Insurance: This covers the shop in case of accidents or injuries that occur on the premises.
Garagekeepers Insurance: Garagekeepers insurance is a type of insurance coverage that is specifically designed to protect auto shops who offer storage, maintenance, or repair services for vehicles. This type of insurance protects the business owner in the event that a vehicle is damaged while it is in their care, custody, or control.
Property Insurance: This covers the shop's building, equipment, and inventory in case of damage or loss due to a covered event, such as a fire or theft.
Business Owner's Policy: This combines general liability and property insurance, as well as other coverage options such as business interruption insurance.
Commercial Auto: This covers the shop's vehicles and any damage or accidents that occur while they are being used for business purposes.
Workers' Compensation: This covers employees in case of injury or illness while on the job.
Overall, auto repair and service shops need a combination of commercial insurance to protect against various risks and liabilities. It is important to work with an insurance agent to determine the right coverage for your specific business needs.
How Does BOP Protect Auto Service & Repair Businesses?
A BOP policy combines commercial property insurance, commercial liability insurance, garagekeepers and business income insurance into one package. Commercial property insurance protects your physical building and location along with its contents should you experience a covered event, such as a fire, burst pipe, or weather phenomena that causes your business damages.
A liability policy protects your auto business when a customer slips and falls on your premises or your workers or the products and services that you sell cause damage to customers, other people, or property. Garage keepers protects you from damages done to your customers vehicles while they are you in care, custody and control. With a business income policy, your business is protected from income loss due to a covered event. For example, if a tornado hits your shop, then you are protected from loss income while reasonable repairs are made.
This auto service repair shop insurance is one of the most affordable means to cover your business and affords a minimal amount of protection against potential pitfalls. However, you can invariably bundle other policy types with a BOP policy to get a more comprehensive layer of protection to shield your business from financial loss and the fallout of any claims against you. Some of the most common addendums to BOP policies and rider policies that are sold to garage and auto repair shops include:
- Garagekeepers liability insurance. This type of coverage enhances the commercial property liability coverage that you carry. It ensures complete coverage for your shop and covers damages arising from the operation of your garage. It is an essential policy for most garage owners.
- Garagekeeper's insurance. Keeping customers' autos on site means carrying garage keeper's insurance. This policy protects your customers' vehicles from damage during the course of being storage in your facility. Your business may need this coverage in order to operate in your state, but either way, it is a valuable coverage to own.
- Medical payments coverage. If someone is injured on your premises, whether you own or lease your garage, this type of insurance pays for any medical expenses related to the injury.
- Commercial auto insurance coverage. For any vehicles that your business uses in a business capacity, you need to carry auto insurance rated for commercial use. This includes service vehicles that you deploy to help stranded motorists as well as any vehicle used for strictly business purposes.
- Equipment breakdown protection. Guard against the financial loss that follows a mechanical breakdown, power surge, operator error or burn out with this type of coverage.
- Employee dishonesty policies. If an employee steals from you, then you can recover damages under this policy. This is a must-have policy type in most shops.
- Employment practices policies. Choose an employment practices liability policy to protect your business from financial damages due to harassment, discrimination or wrongful firing.
What Are Automobile Service Repair Shops Risks & Exposures

Premises liability exposure comes from slips and falls due to public access to the premises. Customer waiting areas should be provided for customers waiting on repairs. Customers must not be permitted in the garage area. Floor coverings should be in good condition with no frayed or worn spots on carpet and no cracks or holes in flooring. Steps and uneven floor surfaces should be prominently marked. Sufficient exits must be provided and be well marked, with backup lighting systems in case of power failure.
Parking lots and sidewalks need to be in good repair with snow and ice removed, and generally level and free of exposure to slips and falls. If the premises is open after dark, there must be adequate lighting and appropriate security for the area. Cars in the parking lot present an attractive nuisance hazard. Chains should be in place to prevent entrance after hours.
Garagekeepers exposure comes from damage that can occur to customers' vehicles while in the repair shop's care, custody and control. Access to these vehicles should be prevented. Keys to customers' vehicles should be kept in a locked box, with proper identification required to prevent handing the customer's car to the wrong owner. Lots must be well lighted, with chains in place to prevent transport. Fences and other security may also be appropriate.
Workers compensation exposures are high. Brake turning, welding or other repair work must be handled only with appropriate safety equipment, especially eye protection. Lifting of a vehicle by hoists, jacks, and other mechanical means can result in injury should the equipment malfunction. Hoists must be well maintained and procedures in place to prevent vehicles from falling. Workers can slip and fall, or incur back injuries, sprains, strains or hernias from lifting.
If the shop sells batteries, leakage or spilling of battery acids can cause burns on contact with skin and respiratory problems when inhaled. Employees should be provided with safety equipment, trained on proper handling techniques, and have conveying devices available to assist with heavy lifting. Employees performing maintenance or repair work on customers' vehicles should be properly trained.
Products liability exposure can be high due to the potential for an accident in the event that the vehicle is not properly repaired. There should be a check-off procedure in place prior to release of the vehicle to the customer to prevent its being returned to the customer with vital functions not working properly. If the repair shop directly imports or reconditions items for resale, the exposure increases to the point of a manufacturer.
Environmental impairment exposures can be significant due to the disposal of used lubricants, oils, degreasers, solvents and batteries. Adequate procedures should be in place and must be followed to prevent any leakage or contamination. Contracts should be in place to dispose of all environmentally dangerous chemicals.
Property exposure comes from flammables such as lubricants, oils, degreasers, and solvents, used in the repair operations. They must be properly labeled, stored and separated. Aerosols and flammable additives contribute to the overall fire load. Welding is often a part of the operation and needs to be evaluated for proper handling of the tanks and gases, as well as adequate separation from the other operations with either a separate room or flash/welding curtains.
Tires do not catch on fire quickly; however, when they do burn, the fire is difficult to put out and an oily smoke permeates the entire area. Theft is a concern because auto parts are considered to be target items. Appropriate security controls must be taken including alarms, lighting, and physical barriers prohibiting access to the premises after hours.
Crime exposures are from employee dishonesty and theft of money and securities either from holdup or safe burglary. Employee dishonesty is controlled through background checks, inventory monitoring, control of the cash register, disciplined controls and division of duties. Physical audits should be conducted at least annually. Theft of money and securities prevention requires controls of monies kept in the cash drawers and regular bank drops.
Inland marine exposures are from accounts receivable if the repair shop offers credit, computers to monitor inventory and for diagnostics, goods in transit if parts are delivered to customers, and valuable papers and records due to customers' and vendors' records. Backup copies of all records, including computer records, should be made and stored off premises.
Commercial Auto exposures are generally limited to owned vehicles being used for errands to pick up needed supplies. All employee drivers should have an appropriate driver's license and their MVRs regularly checked. All vehicles must be regularly maintained with records retained. Towing presents a more serious exposure due to the potential for damage to the vehicles being towed. All tow truck drivers must be experienced in towing. Towing vehicles must be regularly checked, particularly the hoists and tow bars.
If vehicles are rented to customers, the dealership should keep a copy of the renter's driver's license and proof of insurance. The rental contract should identify permitted drivers and state that unlicensed or minor drivers are not permitted. It should also include a hold-harmless agreement in which renters agree to assume responsibility for the operation of the vehicle to limit the business's exposure to only vicarious liability.
If a collision damage waiver is offered, the customer's signature is needed to document whether this was purchased or declined. The customer should also be required to sign a pre-inspection form to minimize disputes when the vehicle is returned with damages. Vehicles that are rented should be inspected and reconditioned before being rented again.
What Does Auto Service & Repair Insurance Cover & Pay For?

Auto Service Repair claims can refer to various situations where an auto repair shop or mechanic is sued for damages, injuries, or losses resulting from their work or negligence. Here are some examples of such claims and how Auto Service Repair insurance can help pay for the lawsuit:
- Faulty repair work: If an auto repair shop does faulty repair work on a customer's vehicle, causing damage or further problems, the customer may sue the shop for the cost of repairs or the value of the vehicle. Auto Service Repair insurance can cover the cost of legal defense and any settlement or judgment awarded against the shop.
- Damage to customer's property: If an auto repair shop damages a customer's property, such as a garage or another vehicle, the customer may sue the shop for the cost of repairs or replacement. Auto Service Repair insurance can cover the cost of legal defense and any settlement or judgment awarded against the shop.
- Bodily injury: If a customer or a third party is injured due to the negligence of an auto repair shop or its employees, they may sue the shop for damages, including medical expenses, lost wages, and pain and suffering. Auto Service Repair insurance can cover the cost of legal defense and any settlement or judgment awarded against the shop.
- Products liability: If an auto repair shop installs defective parts or components that fail and cause injury or damage, the injured party may sue the shop for damages. Auto Service Repair insurance can cover the cost of legal defense and any settlement or judgment awarded against the shop.
- Theft or vandalism: If a customer's vehicle is stolen or vandalized while in an auto repair shop's care, the customer may sue the shop for the value of the vehicle or the cost of repairs. Auto Service Repair insurance can cover the cost of legal defense and any settlement or judgment awarded against the shop.
In general, Auto Service Repair insurance can provide coverage for legal defense costs, settlements, and judgments in a wide range of claims and lawsuits that arise from an auto repair shop's operations. The exact coverage and limits of the insurance policy will depend on the specific terms and conditions of the policy.
Commercial Insurance And Business Industry Classification
- SIC CODE: Automotive Repair Shops: 7538 General Automotive Repair Shops, 7532 Top, Body, and Upholstery Repair Shops and Paint Shops, 7533 Automotive Exhaust System Repair Shops, 7534 Tire Retreading and Repair Shops, 7536 Automotive Glass Replacement Shops, 7537 Automotive Transmission Repair Shops, 7539 Automotive Repair Shops, Not Elsewhere Classified
- NAICS CODE: 811111 General Automotive Repair, 811112 Automotive Exhaust System Repair, 811113 Automotive Transmission Repair, 811118 Other Automotive Mechanical and Electrical Repair and Maintenance, 811121 Automotive Body, Paint and Interior Repair and Maintenance, 811122 Automotive Glass Replacement Shops, 811198 All Other Automotive Repair and Maintenance
- Suggested Workers Compensation Code(s): 8380 Automobile - Service or Repair Center & Drivers, 8393 Automobile - Body Repair & Drivers, 9516 Electronic Equipment - Installation, Service, or Repair - Shop and Outside & Drivers
Description For SIC Code 7538: General Automotive Repair Shops
Division I: Services | Major Group 75: Automotive Repair, Services, And Parking | Industry Group 753: Automotive Repair Shops
7538 General Automotive Repair Shops: Establishments primarily engaged in general automotive repair.
- Automotive repair shops, general
- Diesel engine repair, automotive
- Engine repair, automotive
- Engine repair, truck: except industrial
- Garages, general automotive repair and service
- Motor repair, automotive
- Truck engine repair, except industrial
Description For SIC Code 7532: Top, Body, and Upholstery Repair Shops and Paint Shops
Division I: Services | Major Group 75: Automotive Repair, Services, And Parking | Industry Group 753: Automotive Repair Shops
7532 Top, Body, and Upholstery Repair Shops and Paint Shops: Establishments primarily engaged in the repair of automotive tops, bodies, and interiors, or automotive painting and refinishing. Also included in this industry are establishments primarily engaged in customizing automobiles, trucks, and vans except on a factory basis. Establishments primarily engaged in customizing automobiles, trucks, and vans on a factory basis are classified in Manufacturing, Industry Group 371.
- Antique and classic automobile restoration
- Automotive body shops
- Automotive interior shops
- Automotive paint shops
- Automotive tops (canvas or plastic), installation, repair, or sales and
- Automotive trim shops
- Bump shops (automotive repair)
- Collision shops, automotive
- Customizing automobiles, trucks or vans: except on a factory basis
- Upholstery repair, automotive
- Van conversions, except on a factory basis
Description For SIC Code 7533: Automotive Exhaust System Repair Shops
Division I: Services | Major Group 75: Automotive Repair, Services, And Parking | Industry Group 753: Automotive Repair Shops
7533: Automotive Exhaust System Repair Shops: Establishments primarily engaged in the installation, repair, or sale and installation of automotive exhaust systems. The sale of mufflers, tail pipes, and catalytic converters is considered to be incidental to the installation of these products.
- Catalytic converters, automotive: installation, repair, or sales and
- Exhaust system services, automotive
- Mufflers, automotive: installation, repair, or sales and installation
Description For SIC Code 7534: Tire Retreading and Repair Shops
Division I: Services | Major Group 75: Automotive Repair, Services, And Parking | Industry Group 753: Automotive Repair Shops
7534 Tire Retreading and Repair Shops: Establishments primarily engaged in repairing and retreading automotive tires. Establishments classified here may either retread customers' tires or retread tires for sale or exchange to the user or the trade.
- Rebuilding and retreading tires for the trade
- Retreading tires
- Tire recapping
- Tire repair shops
- Tire studding and restudding
- Vulcanizing tires and tubes
Description For SIC Code 7536: Automotive Glass Replacement Shops
Division I: Services | Major Group 75: Automotive Repair, Services, And Parking | Industry Group 753: Automotive Repair Shops
7536 Automotive Glass Replacement Shops: Establishments primarily engaged in the installation, repair, or sales and installation of automotive glass. The sale of the glass is considered incidental to the replacement.
- Glass replacement and repair, automotive
Description For SIC Code 7537: Automotive Transmission Repair Shops
Division I: Services | Major Group 75: Automotive Repair, Services, And Parking | Industry Group 753: Automotive Repair Shops
7537 Automotive Transmission Repair Shops: Establishments primarily engaged in the installation, repair, or sales and installation of automotive transmissions. The sale of transmissions and related parts is considered incidental to the installation or repair of these products.
- Automatic transmission repair, automotive
- Transmission repair, automotive
- Transmission, automotive: installation, repair, or sale and installation
7536 Automotive Glass Replacement Shops: Establishments primarily engaged in the installation, repair, or sales and installation of automotive glass. The sale of the glass is considered incidental to the replacement.
- Glass replacement and repair, automotive
Description For SIC Code 7539: Automotive Repair Shops, Not Elsewhere Classified
Division I: Services | Major Group 75: Automotive Repair, Services, And Parking | Industry Group 753: Automotive Repair Shops
7539 Automotive Repair Shops, Not Elsewhere Classified: Establishments primarily engaged in specialized automotive repair, not elsewhere classified, such as fuel service (carburetor repair), brake relining, front-end and wheel alignment, and radiator repair. Establishments primarily engaged in automotive welding are classified in Industry 7692.
- Air-conditioner repair, automotive
- Automotive springs, rebuilding and repair
- Axle straightening, automotive
- Brake linings, sale and installation
- Brake repairing, automotive
- Carburetor repair
- Electrical service, automotive (battery and ignition repair)
- Frame repair shops, automotive
- Front end repair, automotive
- Fuel system conversion, automotive
- Fuel system repair, automotive
- Generator and starter repair, automotive
- Radiator repair shops, automotive
- Wheel alignment, automotive
Auto Service Repair Insurance - The Bottom Line
To find out exactly what type of auto service and repair shop insurance you need and how much coverage you should have, speak to a good insurance agent to go over your options.
Additional Resources For Auto Service & Repair Insurance
Read useful small business auto service and repair insurance policy information. In an aotu related business, you need to have the right type of commercial insurance coverage so that your garage, employees, and customers vehices & other property is protected.
- Auto Dealers
- Auto Detailing & Mobile Car Wash
- Auto Dismantlers
- Auto Garage
- Auto Glass Repair Shops
- Auto Paint Shops
- Auto Service Repair
- Auto Supply Parts Store
- Car Rental
- Car Wash
- Gas Station
- Motorcycle Dealers
- Parking Lot
- RV Dealers
- Snowmobile Dealers
- Truck Rental
- Used Car Dealer

The auto service and repair industry is an essential part of the transportation sector, responsible for maintaining and repairing vehicles to keep them running smoothly and safely. However, this industry also comes with inherent risks and liabilities, which is why commercial insurance is necessary to protect both the business and its employees.
First and foremost, the auto service and repair industry deals with hazardous materials and equipment on a daily basis. There is a risk of accidents and injuries occurring in the workshop, and insurance can provide financial protection in the event of a workplace accident or injury.
Additionally, the auto service and repair industry is subject to the risk of property damage. There is a potential for damage to vehicles in the workshop, as well as damage to the business' own property, such as tools and equipment. Business insurance can cover the costs of repair or replacement in the event of such damage.
Furthermore, the auto service and repair industry is vulnerable to liability claims from customers. If a customer's vehicle is not repaired properly, it can result in further damage or accidents on the road, leading to liability claims against the business. Insurance can provide coverage for these types of claims, protecting the business from financial loss.
In conclusion, the auto service and repair industry needs commercial insurance to protect against the risks and liabilities inherent in this line of work. Without insurance, businesses in this industry would be vulnerable to financial loss and legal action, which could ultimately lead to their failure.
Minimum recommended small business insurance coverage: Building, Business Personal Property, Business Income, Equipment Breakdown, Employee Dishonesty, Money and Securities, Accounts Receivable, Computers, Signs, Valuable Papers and Records, General Liability, Employee Benefits, Environmental Impairment, Underground Storage Tank Liability, Umbrella, Hired and Non-owned Auto & Workers Compensation.
Other commercial insurance policies to consider: Earthquake, Flood, Computer Fraud, Forgery, Goods in Transit, Cyber Liability, Employment-related Practices, Business Automobile Liability and Physical Damage, Garagekeepers and Stop Gap Liability.