Garage Liability Insurance

Garage Liability is often confused with Garage Keepers Coverage, but they are distinct coverages.

Garage Liability Insurance covers damage to a customer’s car caused by the work you did or by the products you installed in the vehicle, where Garage Keepers Insurance covers the physical damage by fire, theft, vandalism or collision to the vehicle while it is being worked on or stored at your location for safekeeping and awaiting pickup by the customer.

Garage Keepers Coverage Example: Criminals break into your garage and vandalize several customer cars as they steal air bags and stereo systems. Garage Keepers Insurance would pay to repair the damage caused to the customer’s car, up to the limit you select.

Garage Liability Coverage Example: You change the oil in a late model vehicle and the technician accidentally puts the wrong oil filter on the vehicle which works for a few days then it leaks oil out of the engine and caused major engine damage. Garage Liability Insurance would cover the necessary repairs necessary to repair the customer’s engine and possibly provide a temporary replacement vehicle during the repairs.

Garage Keepers is really an “inventory” coverage in covers the inventory of customer vehicles kept for safekeeping during the repair process while Garage Liability refers to the garage operations involving the ownership, maintenance, or use of autos and the other dealing with all other garage operations.

Garage Liability Insurance doesn’t protect every type of exposure. Common exclusions include:

• Damage to vehicles in your care (covered by Garagekeepers Insurance)

• Employee injuries (covered under Workers’ Compensation)

• Damage to your own property or vehicles (covered by Commercial Property or Auto Insurance)

• Intentional acts or fraud

• Pollution or environmental contamination (requires special endorsement)

Your insurance agent can help design a comprehensive policy package that fills these gaps and ensures full protection.

• A customer slips on an oil spill in your service bay and breaks an arm.

• An employee accidentally damages another customer’s vehicle while moving cars around the lot.

• A completed repair job fails and causes an accident on the road, resulting in property damage.

• A visitor trips over equipment in your showroom and files a lawsuit.

Garage Liability Insurance provides the financial protection to handle medical costs, settlements, and legal defense in these situations.

When tailoring a Garage Liability policy, consider:

• Business type and size – Dealerships and service shops have different risk levels.

• Annual revenue and payroll – Used to determine exposure and rating.

• Number of employees and drivers – Impacts liability and risk assessment.

• Premises details – Size, layout, and safety controls influence premium cost.

• Contract requirements – Some vendors or lenders may require specific coverage limits.

Typical liability limits range from $1 million to $5 million, depending on your business scale and risk appetite.

• Broad protection against third-party injury or property damage claims

• Helps meet lender, manufacturer, or franchise requirements

• Covers operations both on and off your premises

• Includes defense costs, even if claims are groundless

• Builds customer confidence in your professionalism and responsibility