Auto Services and Dealers Business Insurance

There are two policies that can help protect your auto services business against special risks related to customers and their vehicles:

• Garage liability insurance: This policy is similar to general liability insurance, but extends coverage to the additional exposure of garage operations. For example, it would cover a lawsuit from a customer who slipped in an oily spot at your vehicle service center.
• Garage keepers insurance: Businesses that store or service vehicles should carry this coverage. It protects against accidental damage to a vehicle in your care, custody, or control, such as a customer’s car damaged by an employee in your parking lot or auto repair shop.

Learn about the difference between garage liability and garage keepers insurance.

Small business owners that operate any type of car service or dealership business should consider the following insurance products, which cover any additional risks you might encounter:

• Product liability insurance: This policy protects against legal costs related to defective products, such as a new tire in which the tread separates and causes an accident, or an oil change that used bad oil and damages a customer's car. It's often included with your general liability insurance.
• Errors and omissions (E&O) insurance: E&O insurance, also called professional liability insurance, pays for lawsuits related to professional mistakes and oversights, such as a customer who a vehicle detail took longer than promised or didn't meet promised expectations.
• Business interruption insurance: A BOP often includes business interruption coverage, which covers costs when your dealership is forced to close temporarily due to a fire, storm, or other covered property claim.
• Equipment breakdown coverage: Also called mechanical breakdown insurance, it's an endorsement to your commercial property insurance or BOP, this type of insurance covers expenses when your shop's equipment or machinery suffers a mechanical failure. One policy exclusion is standard equipment wear and tear.
• Surety bonds: A surety bond protects your customers from employee dishonesty and negligent activities. In the event of employee theft or breach of contract, the insurance company will reimburse the customer for their losses.
• Employment practices liability insurance (EPLI): EPLI covers employment-related lawsuits such as harassment, wrongful termination, discrimination, and other work-related issues. If your auto dealership or repair shop has employees, you would benefit from this policy.
• Dealer's open lot (DOL) coverage: DOL provides physical damage coverage to an auto dealer's new car and used car inventory, and comprehensive coverage for fires, hail, vandalism, theft, and other non-collision damages.