Garagekeepers Legal Liability: Coverage, Limits, And More

Imagine if something happened at your garage while you weren’t there: A fire breaks out and destroys every car. Or a vandal decides to add their own personal, finishing touches. For an industry that’s powered by referrals, like auto service, it could be devastating to your reputation.

You could also lose a lot of money – unless you have garagekeepers legal liability insurance.

What is garagekeepers legal liability insurance?

Garagekeepers legal liability is a type of insurance that covers damage to customers’ vehicles when they leave them with you for service, repair, storage, parking, or safekeeping. It’s an optional coverage that’s usually purchased in addition to a general liability policy or bundled business owners policy. It applies to covered locations where a car is being kept, and covers four main “perils”:

• Collision
• Fire
• Theft
• Vandalism

If you have more than one location, each one needs its own coverage. That’s because the building, geographic area, and other factors influence the cost of business liability policies.

Who needs garagekeepers legal liability?

If your business is ever in possession of customers’ vehicles, garagekeepers legal liability is for you. This type of insurance is essential for businesses such as:

• Auto body shops
• Car dealerships
• Electronics installers
• Emissions tests shops
• Oil change services
• Parking garages and parking lots
• Towing companies
• Valet services

What does garagekeepers legal liability cover?

There are two types of garagekeepers coverage you should consider. We’ve been in many claims situations with both coverage types, and we always recommend direct primary for the best protection of your reputation. You can also opt for more basic coverage. Here’s the difference.

Direct Primary Coverage

This type of garagekeepers legal liability insurance ensures the client’s vehicle is covered regardless of who’s liable or at fault. It allows the garage owner to take full charge and responsibility for any vehicle that is kept in the shop because it pays for damage to customer vehicles even if the shop isn’t at fault. It gets claims resolved faster, improves customer satisfaction, and provides customers with the peace of mind that their vehicle will be guarded no matter what happens.

Legal Liability Coverage

Legal liability coverage is the most basic and common type of garagekeepers legal liability. It only pays for damages when an employee is legally liable for the damage to the customer’s vehicle, whether from negligence or a simple mistake. It can involve lengthy claim processes and disputes, so it isn’t as customer-friendly. That’s why we recommend direct primary coverage.

Does it cover vehicles while driving or just in the shop?

Garagekeepers legal liability coverage typically applies while the vehicle is in the business's care, custody, and control, which usually means when it is parked on the premises or being worked on. However, some policies may offer coverage for test drives or while the vehicle is in transit. We always recommend that garagekeepers add non-owned commercial auto liability coverage.

Non-owned liability provides coverage for bodily injury and property damage if there’s an accident when an employee is driving a vehicle the business doesn't own for business purposes. For example:

• An employee drives their personal car to pick up parts
• A test drive is taken in a customer's car

The non-owned liability and garagekeepers liability combination allows you to be fully covered against damage to your customers’ vehicles.

Garagekeepers Liability Insurance Limits And Deductibles

Your policy’s limit is the amount your insurer will pay per incident. Coverage limits for garagekeepers legal liability policies vary depending on the insurer and the policyholder's needs. Common limits are:

• Per vehicle: This is the maximum amount the insurance company will pay for damage to a single vehicle.
• Per occurrence: This is the maximum amount the insurance company will pay for all damages arising from a single incident.
• Aggregate: The general aggregate limit is the total amount the insurance company will pay for all covered losses during the policy period.

To determine the limits you want to find the most expensive vehicle you will reasonably have on your lot, and the maximum vehicles you will have on your lot. Then you can determine the limits of coverage you need.

Deductibles are the amount the policyholder pays towards a covered loss before the insurance company pays anything. They’re usually calculated per-vehicle or per-occurrence. Common deductibles for garagekeepers insurance range from $250 to $1,000.

Top Insurance Companies For Garagekeepers Insurance

When shopping for garagekeepers legal liability, you want to make sure your insurance company is well-known and trusted in the industry. Here are the top insurers we recommend and can help you get quotes for:

Travelers

Travelers is one of the largest and most established insurers in the United States, with a long history of providing garagekeepers insurance. They offer a variety of customizable coverage options for the auto service industry. They’re our most commonly used insurance carrier for this type of coverage.

Liberty Mutual

Liberty Mutual is a major insurer offering various business insurance products, including garagekeepers legal liability. We’ve been using liberty mutual for this coverage for decades, and our clients have had great experiences with their claims process.

EMC

EMC is a well-respected insurer with significant experience in commercial insurance lines, including garagekeepers coverage. They have a more regional focus than national carriers like Travelers, but offer a very good product for auto service businesses. They can also offer coverage to more niche auto service businesses than many other insurance companies.

Need Garagekeepers Legal Liability Coverage?

Garagekeepers legal liability insurance is essential for any business that stores customers’ vehicles. It not only protects your finances, but also your reputation, helping you keep customers satisfied, even if something goes wrong. We can help you determine exactly what you need and help you get quotes from the insurers above and more. Contact us today to get started.