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    Garage Liability Insurance vs General Liability

    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.

    What Is the Difference Between Garage Liability vs General Liability Insurance?

    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.

    What Does Garage Liability Cover?

    A standard garage liability insurance policy can pay for the following claims:

    • Third-Party Property Damages: This coverage reimburses repairs if you or your employee damage customer property. For instance, let's say you offer valet services. If one of your drivers accidentally scratches a customer's car while on duty, garage liability will cover the body repairs needed afterward.
    • Third-Party Injuries: Garage liability will provide protection if your business is held liable for third-party bodily injuries. Most coverage terms require that the incident take place within the premises. However, bear in mind that garage liability insurance will not reimburse the medical expenses of your employees involved in workplace accidents. For these claims, you will need workers' compensation.
    • General Business Liabilities: Garage liability insurance also protects your business from general liabilities—including business-related lawsuits. The policy can even indemnify you of legal fees in some instances.
    • Product Liabilities: Auto business owners who install car parts and modifications are at risk of property damage resulting from faulty products. Fortunately, garage liability can help shoulder repair costs.

    What is the Difference Between Garage Liability Coverage and Garagekeepers Coverage?

    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.

    What Does General Liability Cover?

    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.

    Do You Need Both Garage Liability and General Liability?

    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.

    Does Your Business Need a Garage Liability Policy?

    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:

    Business Nature

    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:

    • Auto dealerships
    • Auto repair shops
    • Car electronics repair and installation shops
    • Interior and exterior car detailing businesses
    • Service stations
    • Smog testing centers
    • Tow truck operators
    • Valets
    • Vehicle glass installers

    Potential Risks Faced

    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:

    • Employee Injuries: You will need the additional coverage of a workers' compensation policy to cover the lost wages and medical expenses of employees involved in work-related accidents.
    • Vehicles Under Repair: Unfortunately, a basic garage liability insurance policy will not cover the damages to vehicles under repair. If you own an auto body shop and regularly repair vehicles, get garage keepers coverage. It covers customer property under your care, custody, or control.
    • Leased Vehicles: Garage liability insurance only covers vehicles within the designated garage business premises. You will need another policy that covers damage sustained on the road.

    Combined Vehicle Value

    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!

    Frequently Asked Questions

    What insurance does a mobile mechanic need?

    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.

    What is not covered under garage liability?

    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.

    What are typical business liabilities?

    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.

    What is garage keepers' legal liability coverage?

    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.

    Which of the garage policy coverages will pay for physical damage to a garage customer's auto?

    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.

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    Assured Standard will protect your business with the right insurance, depending on your needs. Now more than ever, it’s crucial to have the right general liability insurance experts on your side. Protecting the future of your business starts today.
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