What's the difference between garage liability vs. general liability insurance policies? Several business owners find these policies confusing because of their overlapping coverage and liability terms. Bear in mind that these are two different types of liability insurance policies. While they have some similarities, the injury and property damage they cover have contrasting legal implications.
General liability insurance is an all-encompassing policy, but it does not offer auto coverage for garage operations. Garage owners need separate garage liability policies. This insurance protects policy owners from third-party property damage, bodily injury, and vehicle damage claims. However, garage liability coverages are limited to those from the auto industry.
Both general and garage liability insurance cover damage from third-party claims. However, the former does not cater to businesses facing specific risks associated with handling automotive vehicles, while the latter is only available to garage owners and auto repair shops.
A standard garage liability insurance policy can pay for the following claims:
Contrary to popular belief, garage keepers and garage liability insurance have different coverages. The latter provides comprehensive protection against third-party claims, while garage keepers' policies cover damage sustained on vehicles under your care, custody, or control. These are crucial to garage repair shops.
Pro Tip: We recommend using garage keepers coverage to boost your existing comprehensive garage liability insurance plan.
Most policies have extensive, all-encompassing coverages. In fact, general liabilities include claims involving third-party property damage or bodily injuries stemming from your business operations. However, keep track of your coverage limits. If the claims or settlement fees exceed the maximum limit of your liability coverage, you will have to pay the difference out of pocket.
Experts recommend both general liability and garage insurance, but getting two policies costs too much. Budding small business owners could barely afford garage liability insurance premiums, much less add an extra CGL. Instead of getting a separate policy right from the get-go, opt for policy endorsements. Extend coverage limits with garage keepers and workers' comp as your venture grows.
No business owner should rush deciding between garage liability and general liability insurance policies. As we mentioned above, coverage nuances have varying implications. Misunderstanding the differences could lead to serious legal complications in the long run. At worst, you might end up with a policy that does not cover your business operations.
To ensure that you have sufficient insurance, consider the following factors when shopping for garage or general liability coverage:
Garage liability policies generally suit businesses from the automotive industry. Since a commercial general liability policy would not cover the risks associated with handling motorcycles, trucks, and cars, among other vehicles, you will need specialty insurance. The following businesses should prioritize garage insurance:
The standard garage liability policy covers third-party personal injury, bodily injury, and property damage claims stemming from garage operations. However, there are limitations. Some of the most significant exclusions to take note of include:
As a general rule, your insurance protection should correspond with the risks your business faces. Insufficient coverage puts you at risk of paying expenses out of pocket, but excessive coverage will spike your premiums and drain monthly profits.
How do you determine the exact amount you need? Apart from gauging industry-specific risks, auto businesses should also calculate the total value of the third-party vehicles they handle daily.
For instance, premiums shops that repair luxury car brands face high-risk liability exposure, so they have inflated insurance needs. Meanwhile, small business owners that work on regular sedans and SUVs can minimize their coverage.
Struggling to understand the basics of auto insurance? Don't worry because Assured Standard can help! Check out our detailed article explaining the differences between commercial and personal auto insurance policies!
Protecting yourself with public liability insurance will provide you cover should a member of the public become injured on your premises or should you damage someone's property while on the job. Additionally, professional indemnity coverage protects you in the instance that someone makes an accusation against you due to what is considered professional negligence.
Garage liability insurance will not cover the tools, building, personal, or business property of the policyholder. It does not provide coverage for vandalism, stolen vehicles, and damage from events such as hail. Finally, the policy does not cover accidents and/or damage to customer vehicles being serviced on-site.
Current liabilities are the money owed for operating expenses such as accounts payable, wages, and taxes. In addition, payments on the long-term debt will also be listed in current liabilities, which typically represent salaries or maybe even income tax that is due next year.
Garage keepers' legal liability insurance provides protection in case a vehicle is damaged by fire, theft, vandalism, or collision. It also protects your customer's car when you are storing it at a covered location for parking, storage, or even servicing.
Direct Primary Garagekeepers' Liability covers the customer's vehicles when they are not at fault. If a loss is caused by something that was out of their control such as weather or theft, this type of policy will cover it for you because your vehicle has adequate protection from these unforeseen events.
Commercial general liability coverage has extensive implications that protect businesses from bodily injury and property damage claims. However, these policies do not cover garage owners because they face unique risks. If you work in the automotive industry, bolster your business insurance strategy with a garage liability plan. These extend CGL coverages to certain garage operations.
Also, remember that blindly following cookie-cutter insurance plans do more harm than good. Your garage liability insurance policy should correspond with the particular exposures your business faces. Use insurance as a tool to eliminate business risks.
Assured Standard emphasizes that trucking service providers should consider bolstering their insurance policies as they expand. Check out our comprehensive guide on specialty insurance for the automotive industry.