Operating an auto dealership comes with inherent risks. From accidental injuries on your property to legal claims related to vehicle sales and repairs, many potential liabilities could impact your business.
Garage liability insurance is a type of business insurance that protects dealerships from these financial threats by covering bodily injury, property damage, and legal claims arising from business operations. Without proper coverage, a single lawsuit could lead to major out-of-pocket expenses and even business closure.
For example, if a customer slips on an oil spill in your dealership and suffers an injury, this policy helps cover medical expenses and legal fees. Similarly, if an employee accidentally damages a third-party vehicle while moving it, garage liability insurance can help cover the repair costs and potential legal claims.
This type of insurance is essential for:
- Auto dealerships
- Tow truck operators
- Vehicle repair shops
- Service stations
- Any business handling, repairing, or servicing vehicles
This guide breaks down the essential details of garage liability insurance, what it covers (and doesn’t), and how to choose the best policy for your dealership.
What Does Garage Liability Insurance Cover?
Garage liability insurance provides coverage for common risks auto dealerships face daily. Here’s a detailed look at how it protects your business.
Bodily Injury & Property Damage
If a customer, vendor, or visitor is injured on your premises, this insurance helps cover their medical bills and related expenses. This insurance also covers damage to another person’s property. For instance, an accident during a test drive damages a third-party vehicle, this policy covers repair costs.
Legal Costs & Settlements
If your dealership is sued for an accident or negligence, garage liability insurance helps cover legal defense costs, settlements, or judgments. Even if the claim is frivolous, legal representation can be costly, making this coverage invaluable.
Operations Liability
Auto dealerships engage in many operations, from vehicle sales to repairs and test drives. If an employee or business activity causes harm or damage, this coverage helps absorb the associated financial burden.
Products and Completed Operations
If a customer experiences issues after a repair due to faulty service and files a claim against your business, garage liability insurance helps cover related legal and compensation costs.
What’s Not Covered by Garage Liability Insurance?
While garage liability insurance provides broad protection, it does not cover everything. For comprehensive coverage, dealers need additional policies. Here is everything garage liability insurance does NOT cover.
Damage to Business Property
If your dealership building, tools, or equipment are damaged by fire, theft, or other perils, commercial property insurance is needed for protection.
Damage to Dealership-Owned Vehicles
If vehicles owned or sold by your dealership are damaged, garage liability insurance won’t cover the costs. Instead, dealer open lot insurance provides inventory protection.
Employee Injuries
Employee injuries sustained on the job require workers’ compensation insurance, which covers medical expenses and lost wages. Workers’ compensation insurance is required by law.
Customer Vehicles Left for Service
If a customer leaves their vehicle at your dealership for repair and it is stolen or damaged, garage keepers insurance will cover the loss.
Garage Liability vs. Garage Keepers Insurance: What’s the Difference?
Many dealership owners confuse garage liability insurance with garage keepers insurance, but they serve different purposes:
- Garage Liability Insurance protects against third-party bodily injury and property damage claims related to business operations.
- Garage Keepers Insurance covers physical damage to customer vehicles left in your care, such as those in for service or repairs.
Most dealerships bundle both policies for complete protection.
How Much Does Garage Liability Insurance Cost?
Several factors influence the cost of a garage liability insurance policy, including:
- Business size – Larger dealerships with more operations tend to have higher premiums.
- Coverage limits – Higher limits mean better protection but come at a higher cost.
- Location – Businesses in high-risk areas may have increased rates.
- Claims history – A history of claims can raise premium costs.
Small dealerships typically pay between $1,000 and $3,000 annually for coverage, though rates vary based on risk exposure and policy details.
Finding the Right Garage Liability Insurance with Insured ASAP
Selecting the right garage liability policy can be complex, but working with a trusted provider like Insured ASAP guarantees comprehensive coverage at a competitive rate.
Why Choose Insured ASAP?
- Affordable Rates – We partner with leading insurers to provide cost-effective policies.
- Quick Quotes – Get a quote in minutes and secure coverage fast.
- Tailored Policies – We provide custom coverage to meet your dealership’s unique risks.
- Expert Support – Our specialists help you understand your coverage options help you stay flexible over time.
Look at garage liability as a safeguard against financial uncertainty. With the right coverage, you can confidently grow your business without worrying about unexpected legal and financial challenges. For more information or to get a quote in minutes, call (800) 641-7488. You can also get a quote online.
