What Insurance Do I Need to Run a Garage?

Every business needs to be insured. A single mishap could spell the end of your company if you aren’t. However, insurance needs vary wildly depending on the profession involved. For example, medical professionals need malpractice insurance, something that few other jobs call for. So, what about a mechanic that runs a garage? Is there a sort of “garage insurance” that you can buy?

Insurance companies often bundle together a suite of insurance plans to cover all the needs of a specific business. Essentially, garage insurance is the perfect combination of insurance products to make sure that your garage can operate worry-free. Let’s take a closer look at each of the items that we would include in a comprehensive garage insurance plan. We’ll look at ones you absolutely must have, along with some that might be good options to add to your plan.  

Garage Insurance: What Insurance Do I Need to Run a Garage?

Liability Insurance

Liability insurance is one of the most common types of insurance sold to businesses. It’s essential if you have a physical property that customers can visit. Liability insurance covers injuries to individuals (not workers) that occur on your property. It also includes coverage for damage to someone else’s property.

If someone is injured on your property, or their property is damaged while on yours, your insurance representative will first determine if the incident was caused due to negligence or fault from your business. If so, you will need to pay a deductible and your insurance premiums may rise. If not, the damaged party will be responsible for their damages. Having liability insurance means you don’t have to worry about negotiating with anyone after an incident. Just call your insurer.

Do Garages Need Liability Insurance?

Yes, you absolutely do. Garages pose several risks to customers that other businesses don’t. For example, oily fluids can present a slip and fall risk that could lead to injury. Customers could wander into dangerous areas and be hurt by machines or simply by not watching where they are walking.

While damage to a visitor’s property is less likely, it could still happen. Imagine one of your workers moves a car out of the garage only to strike a parked car in your lot. Incidents like these do occur.

3rd Party Vehicle Insurance

Third-party vehicle insurance is an extension of your usual comprehensive vehicle coverage. It’s called third-party insurance because its coverage is specifically designed to protect cars when being driven by someone who isn’t the vehicle’s owner. Most car insurance plans include this kind of coverage. It’s what allows you to let your friend drive you home or borrow your car.

But in the context of a business, you may need to purchase it separately. If you have employees who will be behind the wheel of other people’s cars, don’t assume that the car owner’s insurance will cover damages caused by your employees. Likewise, your employee’s car insurance may not extend to on-the-job activities. Ultimately, your business will be held liable if one of your employees damages a customer’s car while driving it. Third-party insurance protects you in those cases.
 

Do Garages Need 3rd Party Vehicle Insurance?

Since it’s very likely that your staff will need to drive other people’s cars, even if only for short distances on your property, it’s a good idea to have third-party vehicle insurance. It protects your customers and your business, and your other forms of insurance may not cover these scenarios.

Property Insurance

Property insurance protects the physical structure you operate from. Just as you might have homeowners’ insurance to protect your house, you should have insurance to protect your workplace. Natural disasters can happen nearly everywhere. Civil unrest could lead to vandalism or other damage to your property. There’s always the risk of a fire or other accident that could damage your place of business.

Property insurance goes beyond brick and mortar. Your equipment is also covered, provided it is properly itemized and declared when you sign your policy. If someone breaks into your garage at night and steals valuable tools, you’ll be able to file a claim and get back to work. Property insurance is vital to ensure continuous operations. The last thing you want after an incident is to be unable to work for days until the problem is solved.

Do Garages Need Property Insurance?

This is as important as liability insurance and may even be legally required in your local area. If you have any sort of outstanding loan on your property, your bank will certainly require you to have property insurance. Besides, you likely have lots of expensive equipment that you want to protect. Consider property insurance a must for any garage.

Workers’ Compensation Insurance

Workers’ compensation insurance covers claims made by workers who are injured while on the job. Many employers mistakenly believe this is covered by their state. However, while the government does provide disability benefits for people who suffer long-term damage, these programs provide no coverage for civil claims against your company. An injured worker could sue for their economic damages in addition to pain and suffering. Without this insurance, you’ll be stuck paying the whole bill.

Workers’ compensation only covers injuries that occur while performing job-related tasks and while on the clock. Your workers cannot file a claim against it if, for example, they are injured while driving to work or while returning home. However, if you send someone out to pick up some parts, and they are injured while doing so, they could file a claim against you. This is why it’s so important to have workers’ compensation coverage.

Do Garages Need Workers’ Compensation Insurance?

The answer depends on how your garage operates. Do you have regular W-2 employees? In that case, you absolutely must have workers’ compensation insurance. Most states mandate it, and it would be foolish not to have it.

However, if your mechanics are all independent contractors, also known as 1099 workers, then you are not usually required to carry workers’ compensation insurance. Likewise, if your garage is small and you’re the sole operator, you wouldn’t need to have this coverage for yourself alone. In general, consider workers’ compensation mandatory. If you want to grow your business, you’re going to need it eventually.

Commercial Auto Insurance

Commercial auto insurance is very similar to the car insurance you have for your own vehicle. The main difference is that instead of insuring a specific individual, it insures anyone driving for the company. In addition, insurers can tailor your commercial auto insurance plan to account for more types of vehicles, which might be used in situations that a typical car insurance plan wouldn’t cover.

It works much the same way as your car insurance does. If your company vehicles get into an accident, the driver is protected by your insurance plan, as are damages to your vehicle. Whether or not you will be held liable depends to an extent on your state’s rules regarding auto accidents. California is not a no-fault state, meaning that if your driver was responsible for the collision, your company can be sued. This insurance protects you in that event.

Do Garages Need Commercial Auto Insurance?

It depends on whether your garage has company-owned vehicles. If you do, then you really should have this coverage. If you have any loans out on any vehicles, the bank will require you to have it. Commercial auto insurance can cover a tow truck, loaner vehicles for customers, or company cars for staff. Those vehicles can greatly increase the quality of the services you provide. Consider getting commercial auto insurance so you can provide even better service.  

Key Man Insurance

You may not have heard of “key man” insurance before, but it is quickly growing in popularity. The basic concept works like this. Some people in your organization are “key people”, people who, if they were to die or be unable to work, would make doing business extremely difficult. Typically, these are people in management positions who understand all the inner workings of the business. These are people who are impossible to replace overnight.  

When you have key man insurance, if something happens to one of the designated “key people”, you can receive payment for as long as they are unable to work or a specified amount in the event of their death. Do note that this insurance doesn’t pay out if the employee simply resigns, although you can transfer coverage to their replacement with no hassle.

Do Garages Need Key Man Insurance?

Key man insurance might be a good idea for the business owner or lead manager. If you have a master mechanic that you cannot live without, that could also be a good person to insure.

Get Comprehensive Garage Insurance Today

Rather than piece together each one of these components separately, get all of the insurance plans you need to keep your garage running smoothly. Contact ISU Armac Insurance Services to learn more about our garage insurance plans and how they can protect your garage.