Let’s say you own an auto repair shop. In the middle of the night, thieves break in and steal your customer’s car. Without the proper business insurance, you could be on the hook to pay to replace your customer’s car.
If you own a business such as a car wash, garage, auto repair shop or towing company, garagekeepers insurance is a must-have.
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What Is Garagekeepers Insurance?
Garagekeepers insurance is a type of small business insurance that covers your customer’s vehicle while it is in your business’s care, such as parking, repairing, servicing or storing. For example, if you own a car wash and an employee accidentally backs into a pole, garagekeepers insurance would pay to repair your customer’s car.
Garagekeepers insurance is also called “storage location insurance.” It’s typically not included in a standard garage liability policy, meaning you’ll have to pay extra for it.
What Does Garagekeepers Insurance Cover?
Garagekeepers insurance covers damage to vehicles you are servicing for problems such as:
- Accidental damage, such as a collision
- Fire
- Severe weather, such as wind or hail
- Theft
- Vandalism
For example, if someone broke into your tow yard and vandalized a car, your garagekeepers insurance can help pay to repair the damage.
Garagekeepers Insurance Coverage Options
You may have several different options to cover your customers’ cars with a garagekeepers insurance policy, including:
Legal Liability
This is the most common type of garagekeepers insurance. Garagekeepers legal liability covers your customer’s cars for damage accidentally caused by you or your employee, such as a cracked windshield while performing standard maintenance.
Per-Occurrence Limit
The per-occurrence limit is the total amount of coverage you’ll have for all vehicles under your care, custody and control that are damaged in a single incident. For example, if someone broke into your shop and vandalized three cars, that would be considered a single incident.
The typical maximum per-occurrence limit is $2,500, but you may have other options, depending on your state.
Per-Vehicle Deductible
The per-vehicle deductible is the amount that’s deducted from your insurance claims check for each vehicle that is damaged or stolen.
For example, if you have a $500 per vehicle deductible and three cars in your shop are vandalized, $500 will be deducted from the cost to repair each vehicle. Here’s what that might look like:
Direct Primary
Direct primary covers a customer’s car if it is stolen or damaged, no matter who is at fault for the accident.
Direct Excess
Direct excess is a secondary coverage, meaning it kicks in after your primary coverage.
For example, if a fire in your shop damages a customer’s car, the claim would be covered by your customer’s comprehensive car insurance (primary) and any excess amount not covered by their insurance would be covered by your direct excess coverage (secondary).
Personal Property Endorsement
You may be able to purchase an endorsement that covers personal property kept inside your customer’s car.
What Does Garagekeepers Insurance Not Cover?
Here are some common exclusions in a garagekeepers insurance policy:
- Contents of your customer’s car, such as items in the glove box or trunk
- Damage from defective parts or faulty workmanship
- Damage caused by war
- Stereo equipment that is not permanently installed
- Theft by you or your employees
Who Needs Garagekeepers Insurance?
Small businesses that typically need garagekeepers insurance include:
- Auto body repair shops
- Auto repair shops
- Audio installation
- Car dealerships
- Car washes
- Detailing operations
- Emissions tests shops
- Independent mechanics
- Oil change and lube stations
- Parking lots and garages
- Towing businesses
- Valet and parking services
- Vehicle interior restoration shops
- Vehicle painting and pinstriping services
- Windshield repair and installation services
How Much Does Garagekeepers Legal Liability Insurance Cost?
Your garagekeeper insurance cost will depend on several factors, including:
- Your business type
- Location of your business
- The types of vehicles you service
- Your revenue
- The number of vehicles you typically keep on-site
- Your coverage limit
- Your deductible amount
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Garagekeepers vs. Garage Liability Insurance
Garagekeepers insurance covers your customer’s car for damages while it is under your care. For example, if someone vandalizes a car while it’s at your auto repair shop, your garagekeepers insurance can pay for repairs. Garagekeepers insurance is sometimes called “stored location insurance.”
Garage liability insurance is a type of general liability insurance. It covers property damage and injuries accidentally caused to others during business operations. For example, if you test drive a customer’s vehicle to diagnose a problem and cause a car accident that results in injuries, your garage liability insurance can pay for damage to the other car, their medical expenses, and your legal costs, judgments and settlements if you are sued because of the accident.
Garage liability insurance does not cover your customer’s car if you get into an accident. For example, if you damage your customer’s car while on a test drive, your garage liability insurance will not cover it. You will need garagekeepers insurance to help cover the gap.
Garagekeepers Insurance vs. Garage Liability Insurance At-A-Glance
How to Choose the Best Garagekeepers Policy
When shopping around for garagekeepers coverage, you’ll want to get a handful of quotes, and do a side-by-side comparison. Just remember to get quotes for the same types of coverage and policy limits.
Play around with different deductibles and policy limits to see how it might impact the cost. While getting a higher deductible means a lower premium, that doesn’t always mean it’s the right choice for your situation.
Look for discounts. A discount spotted is savings earned. Common discounts include autopay and bundling two different policies (i.e., garagekeepers with auto insurance) with the same insurance company.
Here’s a guide to help you find the best garagakeepers policy:
Gather Your Information And Documents
Before you buy a garagekeepers insurance policy, you’ll need to have some basic information such as:
- Information on your business and what type of services you perform
- Number of employees
- Details on your business location, including if you rent or own the building where your business is located
- Your business revenue
Consider Other Business Insurance Types
A garagekeepers insurance policy is only one small piece of the business insurance puzzle and it won’t cover you for problems like theft or damage of your business property, lost income, accidental property damage or injuries caused to others.
If you want coverage for these problems, you’ll need to buy additional coverage. Here are some to consider:
- General liability insurance. This essential coverage type pays for bodily injuries and property damage accidentally caused to others. General liability insurance also covers other problems such as reputational harm claims and copyright infringement claims.
- Commercial property insurance. This covers your business equipment and property for damage caused by problems such as severe weather, fire, theft and vandalism. Commercial property insurance also covers fences, outdoor fixtures and signs.
- Business interruption insurance. This replaces lost income if you can’t open due to a problem covered by your policy (like a fire). Business interruption insurance can also cover the cost of renting a temporary space so you can stay open.
- Commercial auto insurance. If you use a vehicle for work purposes, such as driving a van to pick up parts, you’ll need commercial auto insurance. A personal car insurance policy doesn’t cover business use.
- Workers compensation insurance. This covers your workers who suffer an illness or injury due to work. Workers compensation insurance is required in most states, even if you have just one employee.
- Garage liability insurance. This is a form of general liability insurance and covers accidental property damage and injuries due to hazardous workplaces like a repair shop or garage.
- Equipment breakdown insurance. If you rely on equipment or machinery for work, equipment breakdown insurance can help pay to repair or replace equipment that unexpectedly stops working due to problems like electrical shorts, power surges, motor burnout and mechanical failures.
Consider A Business Owners Policy
A business owners policy (BOP) bundles three core coverage types: general liability insurance, commercial property insurance and business interruption insurance. It’s usually cheaper to buy a BOP rather than buying these policies separately.
Compare Business Insurance Quotes
Whether you buy garagekeepers insurance as a standalone policy or as part of a BOP, it’s a good idea to compare business insurance quotes from multiple insurers. That’s because business insurance companies don’t price their policies the same.
You can usually find free business insurance quotes online or by speaking with an independent insurance agent.
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