The automotive industry is a growing space, valued at around $63 billion. However, despite the promising future for an auto repair business, auto repair shops face unique challenges and risks.
In fact, there are many things that an auto repair shop owner needs to take into account while opening a repair shop. Irrespective of the type of services offered by the auto repair shop, the risk of doing and running this business will always be prevalent.
So what should be done? Automotive business insurance is the perfect method to insulate an automotive repair shop or business from risks and challenges.
Here, we are going to discuss the different options of automotive repair insurance available to business owners. This will help you in deciding what coverage you need for your auto repair business.
What is Auto Repair Shop Insurance?
Let’s start off by understanding what auto repair shop insurance is and how it works.
To keep things easy and straightforward, auto business insurance is coverage or insurance that helps to protect your auto repair shop from losses incurred by risks.
While running an auto repair shop, you will notice that no matter what you do, certain business risks will always remain. This is why there will always be a need for business insurance.
In fact, auto mechanic insurance is also important because performing repairs can be dangerous. This means that you will need to protect your team of auto mechanics, property, and equipment from harm and losses.
The Different Types of Insurance For An Auto Repair Business
This brings us to the next question at hand. What are the different types of auto mechanic insurance available for auto repair shops and how do they work?
Below, you will be able to find a detailed list of the different types of insurance and how they work. Pick the ones that are best suited to your needs.
1. Business Insurance (Business Owner’s Policy Insurance)
Every automotive business owner needs to get business insurance or a business owner’s policy insurance. This is a combination of general liability insurance, commercial property insurance, business property insurance, and business interruption insurance.
Let’s go and explore each type of insurance.
a) Commercial Property Insurance
Business property, such as tools, equipment, furniture, and other inventory, is at a greater risk of being damaged, stolen, or destroyed during a disaster or other emergency. If the property is damaged or destroyed, the policy will pay to restore or replace it.
Running an auto repair shop that is located in a public place makes your property more vulnerable and exposed to threats.
b) Business Interruption Insurance
Business interruption insurance, also known as business income insurance, is a type of insurance for businesses that protects them against losses in income.
If your auto repair shop building is damaged, it helps in covering the damage of lost income, operating expenses, and other costs, as the name suggests. This will help you get back to your day-to-day operations more quickly.
You should also consider getting regular general liability insurance.
2. General Liability Insurance
Regardless of industry, businesses face risks that should be protected by insurance. General liability insurance is the most common type of insurance that business owners invest in.
Some of the risks general liability insurance covers are bodily injury, property damage, medical payments, legal defense, and personal and advertising injury. Fees totaling hundreds of thousands of dollars could be incurred if your business is sued. The only way to prevent this type of event from devastating your business is to have a sufficient general liability insurance policy in place.
In fact, getting general liability insurance should be one of the first steps you take as you set up your own automotive repair business. General liability insurance is one of the most important mechanic insurance, especially for a small business in the automotive repair space.
You should also consider getting a commercial auto policy and expert insurance advice from an insurance company, especially if you are a small business with limited money for business operations.
3. Property and Equipment Insurance
Property and equipment insurance and business property insurance are great ways to protect your property against property damage from unforeseen circumstances.
In the event of property damage or losses from sudden power surges or mechanical breakdowns, this is additional insurance and coverage for your special equipment.
Equipment and property are a hefty investment for automotive businesses. Hence, it is important to get financial protection for your assets and property. Otherwise, it can be quite tricky for automotive businesses to bounce back from property damage.
4. Cyber Liability Insurance
As an auto repair that caters to customers by repairing a customer’s vehicle, your business will be vulnerable to data breaches.
If you use the internet and other software to store client information to repair your customer’s car, this insurance will protect you against data theft and other losses.
Nowadays, many auto repair businesses store their client’s information online. However, if you are storing the information of your customer and your customer’s car on digital mediums, you need to be extra careful.
If your business experiences data breaches, you could incur heavy losses. The best way to protect against this type of risk is through cyber liability coverage.
5. Workers Compensation Insurance
To repair a customer’s vehicle, you need to have a team of workers and mechanics in place. But when it comes to having workers, there are other risks involved which is why you need to explore insurance solutions.
The risks of providing auto service for customers’ vehicles are experienced by an auto mechanic.
In addition to auto mechanic insurance, one needs to invest in workers’ compensation insurance as well. The lost wages, missed wages, medical expenses, work-related injuries, and ongoing medical care are covered by this type of policy. A mechanic who works at a shop will have a different rate than a mechanic who works as a mobile mechanic.
This type of liability insurance is just as important as getting general liability insurance for your business.
6. Garage Keepers Insurance
While exploring insurance coverages, you also need to get yourself garage keepers coverage for your auto shop.
If customers’ personal vehicles get damaged in the shop’s parking bay, this is the policy garage owners should invest in since it protects them from paying expenses. Motorized vehicles are not always predictable at times. It is possible for a perfectly functional car to develop electrical problems and cause it to catch fire. It is a good idea to inspect all cars when they come into your shop for repair work because avoiding such situations can be difficult.
This will help you identify any potential problems. Ensuring the keys to every car are locked away when they aren’t needed to reduce the chances of theft and vehicle damage claims is something auto repair business owners should go the extra mile for.
If you don’t have garage keeper’s insurance, you will be responsible for the costs of replacing the vehicle component that your employees damaged.
Wrapping it Up
When selecting an insurance package for your auto repair shop, it’s important to select one that will provide adequate coverage for all aspects of your business, from the building itself to inventory, employees, and their vehicles, as well as liability and workers’ compensation, among others.
A good policy will also include coverage for routine maintenance, repairs, breakdown services, and roadside assistance, which will save you money in the long run by minimizing downtime and repair costs.
