AUTO REPAIR SHOP INSURANCE: Coverage, Cost Types & More

Auto repair shop insurance
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Do you have the essential insurance to keep you covered when unexpected tragedies threaten to bring your business to a halt?  If your automobile experiences a mechanical breakdown, such as a blown gasket or a faulty electrical system, your car insurance coverage will not cover the cost of repairs. This is because, depending on the coverage types you get, a normal car insurance policy only covers automobile accidents and other types of problems (such as car fires and theft). So come along as we discuss auto repair shop insurance and more.

Auto Repair Shop Insurance

If you desire mechanical breakdown coverage, you may be able to purchase optional car repair insurance, also known as “mechanical breakdown insurance.” This covers repairs if your vehicle has mechanical or electrical issues. Car repair insurance is similar to extended car warranties, with the main distinction being that it is purchased from an insurance provider.

Vehicle mechanic insurance is intended to protect mechanics at vehicle repair shops and mobile mechanics from expensive liabilities coming from unexpected events such as customer injury, employee illness, and property damage. A sufficient insurance policy can protect your small business from the financial dangers of lawsuits and claims.

Basic Insurance for Auto Repair

Complete insurance solutions for mechanics and vehicle repair shop owners

Your company specializes in tires, brakes, and mufflers, and we specialize in various insurance packages that protect your company. These are some examples:

Here are some mechanic shop insurance options for your auto shop:

#1. Employee Compensation

When working with large machinery and automobiles, employee injury is always possible. Even a brief loss in concentration might be disastrous. A solid business insurance plan, especially workers’ compensation insurance, will be useful here.

In 2019, the US Bureau of Labour Statistics recorded 9,460 non-fatal accidents and 60 fatalities in the vehicle repair industry. You can avoid the liability of paying hefty medical fees for employees injured on the job by purchasing worker’s compensation insurance.

#2. General Liability Insurance for Businesses

This coverage protects vehicle repair shop owners like you from liability claims for bodily injury, property damage, and advertising injury (such as false advertising, slander, and so on). Anyone entering your store can pursue such liability claims for various reasons. When this occurs, your commercial general liability insurance policy will kick in to cover the associated legal defense expenses and any compensation awarded by the court.

You may be unable to conduct business during a calamity. However, your rent and other expenses will continue to mount while you cannot work on any vehicles. Invest in business income insurance to avoid accumulating liabilities and incurring losses.

Auto repair firms are constantly entrusted with the upkeep of other people’s vehicles. Consider purchasing a garagekeeper’s legal liability insurance coverage to protect yourself from potential financial loss in the event of an accident. This policy covers the costs of repairing or replacing any damaged vehicle while it is in your possession.

This is the coverage that all garage owners should invest in since it protects them from financial liability if clients’ automobiles are damaged while parked in the shop’s parking lot. Automobiles can be unpredictable at times. A perfectly functional car could develop electrical issues and catch fire.

#4. Professional Liability Insurance

Professional liability insurance, often known as errors and omissions insurance, protects service-providing firms such as vehicle repair shops from bearing the full expense of legal defense against negligence claims filed by their clients. For example, suppose one of your clients claims that your services caused a vehicle to malfunction, injuring the customer. In that case, your professional liability insurance policy can cover your lawyer’s fees and any court-ordered compensation that may be awarded following a civil lawsuit.

#5. Commercial Property Insurance

Auto repair shops require a wide range of tools, equipment, and supplies to repair vehicles. Car lifts, air compressors, car jacks, tire changers, wheel balancers, auto parts washers, welders, and plasma cutters are just a few tools technicians utilize. Without dependable commercial property insurance, you risk losing these expensive equipment and apparatus to hazards such as fire, theft, vandalism, and civil disturbances such as rioting. Always remember that it pays to be safe.

The possibility of losing your garage to an accident or natural disaster is worrisome for an auto repair service owner. Purchasing commercial property insurance may be wise because it protects all covered assets from loss.

#6. Workers’ Compensation Insurance

Every day, mechanics working in an auto repair shop face numerous hazards. When they are hurt due to the heavy machinery they employ, your company may face major legal difficulties and be forced to pay for expensive medical bills. Fortunately, the correct workers’ compensation insurance policy may protect your employees and your organisation. If one of your employees is injured, this policy covers their hospital and medical expenses and some of their lost wages due to the incident.

#7. Commercial Vehicle Insurance

After working on a vehicle, your specialists may need to put it through a road test to check that the problem has been remedied. Remembering that employee test drives carry the danger of items breaking apart and collapsing is critical. Commercial auto insurance can protect you and your company from having to pay to repair damaged vehicle components if something goes wrong.

Why Do Auto Repair Shops Need Commercial Insurance

Running an auto repair shop entails particular hazards. Customers rely on your small business to repair their automobiles and trucks, yet working on them might be dangerous. Working with power tools and specialized machinery can be hazardous, but with business insurance, you can have the peace of mind to manage your auto repair shop.

Types of Auto Repair Shop Insurance Coverage 

If you own a small business, you may be able to get by with the cheapest auto repair shop insurance. However, when your vehicle repair business expands and more people visit your store, customer complaints and the likelihood of them suing you will rise. A more complete policy is recommended for larger stores.

#1. Insurance Premiums

A reputed insurance business may appear more expensive than an unknown one, but it is also the safest bet. Many independent insurance agents will approach you as a business owner. Rather than accepting the first price quotation you get, it’s usually a good idea to seek numerous quotes from different vendors. There is frequent leeway to reduce the original estimate quote, so don’t hesitate to bargain!

#2. The History of Claims

If you’ve kept your business largely out of trouble and don’t have too many past insurance claims, you might be able to get a reasonable bargain on auto repair shop insurance. The rate for business insurance is determined by how much risk is linked to your profile.

If the insurance company determines that you will require frequent payouts after undertaking a risk assessment, your premium for the same insurance coverage will rise.

#3. Total Assets Protected

The number of assets insured under the policy determines your company insurance premium. The more assets you have, the more money you’ll have to pay. More repair shops in your area may be enjoyable, but it dramatically raises your insurance costs. When considering growing your firm, properly understand your business insurance coverage, particularly property and equipment insurance.

#4. Employees may be Exposed to Risk

Because there is a higher risk of injuries and compensation to technicians hurt on the job, shops with more employees who deal with heavy equipment will find themselves paying more to their insurance carrier. It can drastically increase your auto mechanic insurance in places where technicians frequently work on cars’ chassis or use grinders.

Advantages and Disadvantages of Auto Repair Shop Insurance

Car repair insurance may seem like a waste of money to some. Still, it is a good way to keep auto repair expenditures in check for others. Many drivers swear by this type of insurance to protect their vehicle investment. So let’s take a look at the advantages and disadvantages.

Advantages of Auto Repair Shop Insurance

The following are some of the advantages of auto repair insurance.

#1. Maintaining Mechanics’ Integrity

One of the most significant benefits of having the proper auto repair insurance policy is that it covers the entire cost of some essential repairs. Certain mechanic firms have no trouble charging exorbitant fees when customers pay out of pocket. With the correct vehicle repair insurance, the insurance company picks up the tab, controls the expenses, and notifies the consumer or policyholder if the mechanic’s fee is high.

#2.  Bumper-to-Bumper 

Auto insurance covers most components required to run your vehicle safely. Such components include the engine, drivetrain, gearbox, exhaust, brakes, and electrical components. On the other hand, body repairs, broken lights, windows, and interior repairs are not covered. Bumper-to-bumper coverage will save you from having to spend a fortune on repairs.

When purchasing bumper-to-bumper auto repair insurance, read the tiny language carefully. Typically, this entails hidden costs, fines, and limited coverage. One example is limiting the amount paid to the service center. Some insurance only pays $55 per hour if they charge $75 per hour for labor. Ensure you are aware of these limitations and constraints before they occur.

#3. Car Repair Insurance as an Alternative to a Warranty

Auto repair insurance policies are essentially the same as warranties. One of the most significant distinctions is that a manufacturer’s or dealer’s warranty expires at some time. When purchasing an older vehicle, some automobile buyers purchase auto repair insurance, which covers it like more expensive vehicles that carry basic insurance. This is nice for folks who want peace of mind with a new car or a late-model certified pre-owned vehicle but don’t want to pay the associated price tag for these warranted vehicles.

#4. A Selection of Alternative

vehicle repair insurance policies are “à la carte,” which means that a driver can acquire a policy for specific parts or systems, such as the engine and gearbox, or for different vehicle parts systems, such as an electrical or braking system. A tailored auto repair insurance policy can address drivers’ concerns by offering precise, adequate coverage for certain mechanical breakdown circumstances.

#5. Auto Cost Budgeting

One of the most critical tasks of home auto repair insurance is budgeting and minimizing overall motor expenditures. Auto repair insurance serves to help budget repair into a financial scenario by replacing liabilities for high one-time expenditures with manageable monthly premium amounts, where big out-of-pocket repair bills can bankrupt a household or cause economic issues. Drivers will know they are insured for any contingency that could otherwise cost them a lot of money.

All of these are reasons why many drivers get auto repair insurance. Before purchasing a policy, reading the fine print thoroughly is critical. To ensure that you get everything you need at a reasonable price. Having adequate auto repair insurance might assist you in controlling the overall expenditures of your daily transportation.

Disadvantages of Auto Repair Shop Insurance

Despite the advantages of car repair insurance, a large percentage of drivers prefer to gamble without it. Why? Here are a few reasons why car repair insurance is not universally praised:

#1. Coverage is Only Partial

 Car repair insurance is adaptable. For example, several alternatives exist for insuring the gearbox, engine, fuel system, and other components. The issue is that they add up. Drivers generally have no idea which portion of their automobile will break first, nor can they forecast which elements of the car will be the most bothersome throughout its existence. That is one disadvantage of purchasing car repair insurance that exclusively covers specific parts and systems.

#2. The Cost of Insurance

Drivers already pay a significant amount to have a car on the road. Because basic liability insurance no longer covers at-fault damages, many drivers opt for comprehensive coverage, which incurs additional fees. Many drivers are content to obtain all of the necessary insurance to cover the costs of a mishap or collision. Car repair insurance increases the driver’s insurance load even further.

#3. Handling of Claims

Those who deal with insurance regularly are familiar with the game that insurers frequently play: an insurer will warmly advocate an insurance product and sign up new customers. When the insurer is asked to pay a claim, things get complicated. Insurance buyers know that fine print might “void” much of the insurer’s responsibility. Many drivers believe there is no use in paying for hypothetical breakdown circumstances only to discover that if they occur, some phrase in the policy lets the insurer off the hook.

#4. The Game of Waiting

 When insurers do pay out, the payout may take months to reach the customer. That’s time a driver won’t have to weigh his or her checkbook against the financial burden of a car breakdown. Again, many drivers prefer to keep money on hand in case of a part malfunction or breakdown of the automobile or truck they rely on for daily transportation.

If the motorist already has a trusted technician for any necessary vehicle service, he or she is unlikely to purchase car repair insurance. One reason drivers may avoid this type of insurance is that the insurer may be primarily interested in collecting premiums and not paying claims. Anyone with insurance will tell you that reimbursing claims is a tremendous pain. That is why, if a driver determines that the long-term expenses of insurance versus the necessary repairs equals out, they will frequently take risks and pay for repairs out of cash. This is especially true for drivers knowledgeable about vehicle repair and can use their knowledge to bargain with mechanics.

Which of the Coverage Forms is Used When Insuring an Auto Repair Shop?

Garage Liability (Business Liability) Insurance

A garage liability insurance policy, like conventional business liability insurance, protects an auto repair company from claims and medical expenditures from an accident on the property.

How Much Does a 1 Million Dollar Business Policy Cost?

A $1 million liability insurance policy costs our small business owners an average of $69 per month or $824 annually. However, liability insurance costs vary depending on factors such as the payroll size.

How to Create an Auto Repair Shop Business Plan?

  • Create an executive summary.
  • Provide information about the company.
  • Perform a market analysis.
  • Determine what services you will provide.
  • Make a sales and marketing strategy.
  • Make the financials.

How Does Professional Liability Insurance Work?

Professional liability insurance is a type of business insurance that protects professionals and businesses against negligence claims made by clients or consumers. Professional liability insurance often covers negligence, intellectual property infringement, bodily injury, etc.

Is General  Liability the Same as Garage Liability?

Garage insurance is a more specific sort of general liability insurance meant to cover businesses in the automotive industry. It tackles the dangers people who own a garage, repair shop, or similar business face.

How Profitable is a Custom Car Shop?

Profit margins for bespoke automobile business operators can range from 10 to 20% on average. It is crucial to note, however, that these margins might fluctuate depending on various factors such as shop location, reputation, and operational expenditures. There are several important considerations to consider regarding factors that influence income.


Working in other people’s cars is dangerous. A lawsuit could be filed if a mechanic inadvertently destroys a customer’s vehicle. Legal bills from an accident, property damage from a storm or fire, and the cost of recovering from a data breach can all be covered by auto mechanic insurance.


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