What Kind of Insurance Do Auto Repair Shops Need?

If you own or operate an auto repair shop, you routinely deal with insurance-related claims filed by your customers. Their car insurance policies typically cover everything from minor dents and scratches to major repairs, and your team must understand how to properly process all of that paperwork in-house.

What Kind of Insurance Do Auto Repair Shops Need

But what kind of coverage do you require to run your business and service the needs of your clients?

As it turns out, auto repair shops in California require several different types of coverage in order to protect themselves. Below are some of the more popular policies, ranging from the general to the specific:

1. Workers Compensation Insurance

Whether you run a mom & pop shop or a full-scale business, the state of California requires that all enterprises use workers compensation insurance to protect their employees in the event of:

  • Job-related accidents
  • Accident-related medical expenses
  • Lost wages and downtime

2. Business Interruption Insurance

Also known as “Loss of Income Insurance,” this policy helps to keep your business up and running when unexpected interruptions occur. With this protection, you can continue covering cash flow expenses, such as:

  • Rent and relocation fees
  • Personal income and employee salaries
  • Supplier, vendors, and utilities

3. Business Property Insurance

This clause protects you against property damage resulting from theft, fire, and vandalism. And in California particularly, your policy should also include earthquake coverage.

In most cases, business property insurance also includes all inventory, furniture, and light equipment within your shop. For heavier machinery, you’ll want to include Equipment Insurance (discussed below).

4. Business Crime Insurance

Although not always required, it’s a good idea to have business crime insurance that protects you (and your clients) from theft, damage, and vandalism – whether they result from employee misconduct or from third parties.

5. Business Auto Insurance

In performing their duties, your employees will often test drive vehicles – both on and off of a repair lot. This policy protects you from any accident-related damages that might occur.

6. Garage Liability Insurance

This type of coverage is similar to traditional business liability protection. It shields you from lawsuits and medical expenses resulting from injuries sustained on the premises — whether it is a customer, vendor, or complete stranger who gets hurt.

7. Equipment Insurance

While business property insurance protects your building and light equipment, this type of policy covers you for heavy machinery that becomes damaged due to power surges or mechanical failure.

8. Garage Keepers Insurance

This is often overlooked, but absolutely vital in the auto repair industry. Garage keepers insurance provides coverage for all client cars left under your care. It differs from business auto insurance in that it can include protection against damages of any kind, whether they’re inflicted by you, your staff, or someone else.

Do You Need Additional Types of Auto Repair Insurance?

The above only represents that which is (or should be) required for all auto repair shops throughout California. However, depending on your business, you may need even more specific policy inclusions, especially if you:

  • Work with luxury vehicles, novelty cars, or hard-to-find parts.

  • Repair school buses, ambulances, and other vehicles with unusual insurance restrictions.

  • Hire a mix of both full-time and part-time employees – as each qualify for different types of benefits.

At Huntington Pacific Insurance Agency, we specialize in helping auto repair shops secure customized policies at affordable prices. Call us at (800) 878-4742 today to have our team connect you with one of the reputable providers in our carefully selected network.