Garage Keepers Liability Insurance


Garage keepers liability insurance is crucial for businesses that service and store vehicles, offering financial protection in the event that a customer’s vehicle is damaged or stolen while in your care. 


Garage Keepers liability insurance protects your customers vehicles


This type of insurance, also known as “storage location insurance,” covers a customer’s automobile while it is in your custody and control, such as when you are providing parking or storage services or performing maintenance on the vehicle. Without this coverage, a break-in or fire could cause significant financial damage to your business. That’s why many small business owners who work with vehicles, such as those in sales, storage, or repairs, opt for garage keepers liability insurance to mitigate their risks and ensure they have the necessary financial protection.


What types of businesses should have garage keepers liability coverage?


Service stations, auto dealers, and garage operations should purchase this coverage, as well as auto repair shops and car washes and detailers.

Other businesses that should consider buying garage keepers liability coverage include:

  • Electronics installers, such as stereo and speaker installation
  • Oil change services
  • Parking lots and garages
  • Emissions tests shops
  • Towing businesses
  • Valet and parking services
  • Windshield repair and installation services

What are my garage keepers coverage options?


When it comes to garage keepers liability insurance, you have various coverage options available to you. Here are the most common types of coverage:


Legal Liability Coverage

This coverage provides protection for damage caused by an employee to a customer’s vehicle during maintenance or repair.


Per-Occurrence Limit

This type of coverage provides a limit for the total amount of coverage you will have for each car under your care that is damaged or stolen during a single event.


Per-Vehicle Deductible

This option allows you to pay a specified amount out of your pocket for each vehicle impacted by an incident before your insurance covers the remaining claim.


Direct Primary Coverage

With direct primary coverage, a customer’s vehicle is protected no matter who is at fault. This coverage includes damages from vandalism, extreme weather, and other events.


Direct Excess Coverage

Direct excess coverage is an affordable alternative to direct primary coverage. It provides secondary coverage to losses that exceed a customer’s personal auto insurance. However, it only applies to claims for which you are not legally at fault.


For instance, if a customer’s vehicle is damaged due to a storm while on your property, the claim would first be covered by their comprehensive auto insurance. Then, your direct excess policy would cover any remaining balance on the claim, up to your policy limit. If the customer doesn’t have comprehensive auto coverage, your direct excess policy will cover the claim.


How do I get garage keepers insurance?

This coverage is typically purchased as an add-on to an existing garage liability policy, which is similar to a general liability policy.

General liability insurance offers protection against common business risks such as customer bodily injuries, customer property damage, and advertising injuries. It’s purchased by most small businesses.

Garage liability insurance covers these incidents when they are directly related to your garage business operations.


What distinguishes garage liability insurance from garage keepers insurance?


Garage liability insurance, also known as “garage insurance,” is a form of general liability insurance that safeguards automotive companies in case an accident harms a customer or damages their property during the course of your business operations. It excludes vehicles under your company’s care, custody, or control.


In comparison, garage keepers insurance is an add-on that fills this coverage gap. It covers property damage to a customer’s vehicle while it is in your possession.


For instance, suppose a customer brings a vehicle with an unknown mechanical issue, and your mechanic decides to test drive it to see if they can diagnose the problem. During the test drive, the mechanic collides with another car on the road, damaging both vehicles and injuring the driver in the other car.


In this situation, your garage liability policy would cover the other vehicle and its driver, which could help pay for any resulting medical bills, vehicle repairs, or legal expenses.


Your garage keepers liability insurance, on the other hand, would cover the customer’s vehicle that was being taken for a test drive, which would help pay for any costs related to repairing only the customer’s car.


What’s excluded from a garage keepers liability insurance policy?


Garage keepers liability insurance covers the main components of a customer’s vehicle, such as the body and the engine. However, it doesn’t include personal property inside the vehicle, like items in the trunk or glove compartment, stereo equipment and radios, phones, and radar detectors.


If you want personal property coverage for these items, you may be able to add it to your policy, but this will result in a higher premium.


It’s important to note that garage keepers insurance also doesn’t cover claims based on faulty repair work or defective parts. So, if a customer accuses your business of a poor repair job, you’ll need professional liability insurance to cover the claim.


How much does garage keepers liability insurance cost?

An insurance company will calculate the cost of your garage keepers liability insurance based on several factors, including:

  • Your type of business
  • The location of your business
  • The types of vehicles you deal with
  • The number of vehicles you typically have on site
  • Your coverage limits and deductibles