Running an auto repair shop — or one that also sells cars as a dealer — means you need a specific mix of insurance coverages to protect your business, your building, and your vehicles.
In this video, we’ll break down what insurance you need for an auto repair shop, including how Garage Liability, Garagekeepers, and Dealer Open Lot (Dealer’s Blanket) Coverage all work together to keep you protected.
🔹 Garage Liability Insurance – Combines general liability and auto liability to protect your business from damage or injury caused by your operations or test drives. 🔹 Garagekeepers Coverage – Covers customers’ vehicles while they’re in your care for service, repair, or storage. 🔹 Dealer Open Lot / Dealer’s Blanket Coverage – Covers your inventory of vehicles held for sale from fire, theft, vandalism, hail, or collision. 🔹 Commercial Property Insurance – Protects your building, lifts, tools, equipment, and business contents. 🔹 Additional Coverages to Consider – Business Income coverage, workers compensation, Umbrella liability, and pollution liability coverage.
Whether you’re a small independent shop or a full-service repair and sales operation, having the right garage policy in place can protect your entire business from costly losses.
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Video Summary
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Brian, an independent insurance agent in Michigan, explains the essential insurance coverages required for auto repair shops and car dealerships. He highlights the challenges of finding underwriters for these high-risk businesses and outlines the specific policies needed to protect against liability, vehicle damage, and operational losses.
How's it going, everybody? This video is actually in response to a TikTok comment that I got
randomly from somebody asking what insurance coverages you actually need if you run an auto
repair shop. And he also mentioned that he does have some dealer exposure where he is selling
cars out of that same facility. So this video will be a little bit more specific to the coverages
here in Michigan that I know an auto repair shop with dealer exposures would need. But I can
imagine there are a lot of similarities from one state to another. Thank you for stopping by. My
name is Brian. I'm an independent insurance agent based here in the state of Michigan,
Metro Detroit specifically, and I work with businesses on their commercial insurance programs
as well as helping families and individuals with their personal insurance, their home,
their auto insurance as well. My goal with this channel is to pass on a little bit of
educational information to you so that you can make more informed decisions around your insurance
and then overall help answer any questions that you might have. So let's get into it. And before
we get too far into the video, I do want to invite you to subscribe to the channel. And if you find
this video helpful, useful, anything like that, please feel free to like, share, pass along with
anyone else as well. So first, with an auto repair shop or a dealer, there are obviously going to be
a lot of moving parts. You're dealing with customers, you're dealing with customer vehicles,
maybe any vehicles that have your dealer plates on them. And also if you have employees,
there's just overall a lot going on with the business. So you might be wondering what coverages
you actually need to have in place. And before we get too far into it, I do want to preface this by
saying that unfortunately there are not a lot of insurance companies out there that do underwrite
auto repair shops or dealers. Because of how specific the coverages can get and just overall
the loss ratios and claims that a lot of insurance companies have had related to auto repair shops,
the underwriting market is pretty tight when it comes to these types of businesses. So sometimes
as agents, depending on the operation, we do have to go to what is called the wholesale insurance
market. And this is where we would have access to insurance companies that we might not have
direct company contracts with. But overall to start, the main insurance policy that a lot of
auto repair shops will be looking into is what is called garage liability insurance. And this
essentially combines general liability and auto liability into one single policy. So it'll help
cover things like property damage and bodily injury claims related to your business operations.
For example, if maybe an employee damages a customer's vehicle during a test drive or something
like a customer slipping and falling in the shop, these are situations where this policy would come
into play. And then next is garage keeper's coverage. And this helps protect your customer's
vehicles while they're in your care, custody, and control. So if a car you're repairing gets damaged,
gets stolen, maybe it gets vandalized, there's a fire at your facility, while it is on your
property and in your care, garage keeper's coverage is what would help pay for those costs.
It's essentially coverage for vehicles that you don't own, but are responsible for.
And now if you do sell cars out of this same location, you'll likely need a coverage called
dealer's open lot coverage, or sometimes called dealer's blanket coverage. And this covers the
actual vehicles that your business has in inventory for sale. And it would help with
the physical damage coverage for these vehicles. So things like hail, theft, vandalism, or collision
coverage, if maybe a customer takes a vehicle on a test drive. And now in most dealer situations,
a lot of times they will have a all-encompassing garage policy that combines both the exposures
for the auto repair side of the business and the dealer side into one single policy.
But a simple way to think about this is your garage liability will be your general liability
and auto all combined into one. Your garage keeper's policy will cover your customer's
vehicles from physical damage coverage while they're in your care. And then dealer blanket
coverage covers your own business's vehicle inventory. Now beyond these more auto repair
and dealer-specific coverages, you might also be looking at commercial property insurance,
if you do own the building that your business works out of. And then you also want to make
sure that you have business personal property contents coverage on this commercial property
policy for any expensive equipment, lifts, tools, or other equipment that your business might own.
And then also looking at business income coverage. This helps replace your business's lost revenue
and income after a covered claim, such as something like a fire. So this can be very
important to have in place and have at an accurate amount. And then here in the state of Michigan,
if you do have any employees, you are going to be required to carry worker's comp insurance.
This helps protect employees if they are injured on the job. And then depending on
your business operation, your size, you might also need to look into coverages like
umbrella liability insurance. Overall, every auto repair business and dealer business will be a
little bit different. So you do want to make sure that you have specific coverages that your
business actually needs. But for the most part, a lot of times these will be a lot of the basics
that nearly every auto repair business and garage business will be looking into. So thank you for
watching. And if you are looking for help with your business insurance, I would love the opportunity
to work with you and see if our team can help. There are a lot of ways to get ahold of me and
they should all be in the description below. Please feel free to text, call, email, fill out a
contact form, whatever's easiest. And if you have any other questions about insurance, please feel
free to either reach out directly or leave them in the comments below. I would love to
help answer those as well. So thank you again.
