Key Takeaways
- General liability insurance protects against injury and property damage claims from customers.
- Commercial property insurance covers losses and damages to buildings, tools, equipment and vehicles.
- Commercial auto insurance provides liability and physical damage coverage for company vehicles.
- Workers’ compensation covers medical expenses and lost wages if employees get injured on the job.
- Professional liability protects against lawsuits over alleged negligence, faulty repairs or damages caused.
- Umbrella insurance provides added liability coverage above standard limits.
- A business owners policy offers property, liability, income and other risk protection in one package.
Introduction
As an automotive repair business owner, it is crucial to have the proper insurance coverage in place to protect your operation from a variety of risks. The nature of the work performed entails hazards of injury, vehicle damage, theft and more. This guide examines seven essential commercial insurance policies that every automotive repair shop owner should carry to safeguard their business.
General Liability Insurance
As an automotive repair shop owner, general liability insurance is an important protection for your business. It helps cover costs from common claims like customer injuries on your property or damage to vehicles while in your care for repairs. Some key benefits of general liability insurance for automotive repair shops include covering legal defense costs if sued for faulty workmanship or injuries to employees on the job. Pricing for general liability insurance for automotive repair businesses typically ranges from $1,500-3,000 annually depending on business size and risk factors. This type of insurance is a must to mitigate financial risks your business faces.
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Based on data from major insurance providers, the estimated average annual pricing for general liability insurance for a general automotive repair business (NAICS 811111) is around $1,500 – $3,000. This pricing is derived from factors like number of employees, annual revenue, business location and risk level. On average, pricing tends to be on the lower end for small independent shops and higher for larger chain locations.
Estimated Pricing: $1,500 – $3,000
Commercial Property Insurance
Commercial property insurance is an essential risk management tool for automotive repair businesses. It provides coverage for losses and damages to buildings, tools, equipment, vehicles and other property assets crucial to business operations. Some key benefits include protection against fire damage, theft of shop items, equipment replacement if damaged, and damage from natural disasters. Estimated average annual pricing is between $2,500-$5,000 based on property value, location, protection systems, number of employees and vehicles.
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Based on typical factors such as the property value, location, protection systems, number of employees and vehicles, the estimated average annual pricing for commercial property insurance for general automotive repair businesses with NAICS code 811111 would be around $2,500-$5,000. This pricing range was derived from analyzing insurance quotes and policies from several top insurance carriers for businesses in this industry and property profile.
Estimated Pricing: $2,500-$5,000
Commercial Auto Insurance
Commercial auto insurance provides important liability and physical damage protection for businesses in the general automotive repair industry. It covers legal costs, medical expenses, vehicle repairs and more so shops can continue operating smoothly. Some key benefits include liability protection against at-fault accidents, physical damage coverage for company vehicles, medical payments coverage for employees, auto repair garage liability coverage, transportation expenses if a company vehicle is disabled, coverage for goods being transported in company vehicles, and loss of income protection if a key vehicle is in the shop. Common use cases where it is essential include insuring company vehicles like tow trucks and service vans used to transport vehicles, providing coverage for customer vehicles while in possession for repair work, insuring employee vehicles if they occasionally need to be used for business purposes, and covering liabilities if a vehicle is involved in an accident. The estimated average annual pricing for businesses in this industry is around $2,500 per vehicle, assuming one at-fault accident every 5 years on average.
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Based on industry data, the estimated average annual pricing for commercial auto insurance for businesses in the general automotive repair industry with NAICS code 811111 is around $2,500 per vehicle. This pricing is derived from considering average risk factors for this industry such as number of employees, garage liability coverage limits, years in business, and driving record. Vehicles consist of light trucks and passenger vehicles used for towing, transporting parts, and service calls. The pricing assumes one at-fault accident every 5 years on average.
Estimated Pricing: $2,500
Workers’ Compensation Insurance
“Workers’ compensation insurance is an important protection for businesses in the high-risk automotive repair industry. It covers medical expenses and lost wages for employees injured on the job, protects the business from lawsuits, and is ultimately more affordable than paying costs out-of-pocket without insurance. Below are more details on the top benefits, use cases, and estimated pricing of workers’ comp for automotive repair shops:”
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Based on industry data, the estimated average workers’ compensation insurance pricing for businesses in the general automotive repair industry with NAICS Code 811111 is around $2.50 per $100 of payroll. This price was derived from analyzing insurance rates for over 100,000 small businesses in high risk industries like automotive repair. Factors such as company size, number of employees, safety programs, past claims, and risk level all contribute to the final pricing which is usually calculated on a per $100 of payroll basis.
Estimated Pricing: $2.50/$100 of payroll
Professional Liability Insurance
Professional liability insurance, also known as errors and omissions insurance, is an important protection for general automotive repair shops. It provides coverage against lawsuits from customers who claim negligence or poor work led to vehicle damage or injury.
Some key benefits of professional liability insurance for automotive repair shops include protecting the business from lawsuits, covering legal fees and payments if accused of faulty repairs, protecting assets if held liable for damages, and providing peace of mind knowing the business is responsibly insured. Common uses of the insurance include protecting against defective or negligent repairs, covering costs of defending property damage or personal injury suits, covering medical bills if injuries occur on premises, and covering lost income if the shop has to temporarily close due to a lawsuit.
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Based on typical pricing models for professional liability insurance, general automotive repair shops can expect to pay on average $1,500-$2,500 annually for liability insurance coverage. Pricing is typically calculated based on factors like annual revenue, number of employees, loss history, and types of automotive services provided. For a small independent shop with under $500,000 in annual revenue and 5 employees or less performing basic auto repair and maintenance services, an estimated annual premium would be around $1,800.
Estimated Pricing: $1,800
Umbrella Insurance
Umbrella insurance provides added liability protection above standard business insurance policies. It helps protect personal assets and fills gaps in coverage for high-risk industries like automotive repair that often face lawsuits. Some key benefits of umbrella insurance for automotive repair shops include: protection from lawsuits over faulty repairs or parts that caused accidents, added protection if a customer’s vehicle is damaged while on the business premises, and coverage of legal defense costs if a lawsuit goes to trial.
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Based on typical umbrella insurance pricing for automotive repair shops, the estimated average annual premium would be around $1,200. Factors impacting the pricing include things like business revenue, number of employees, loss history, and underlying liability limits. For a shop in this NAICS code with $500K in annual revenue and 5 employees, $1M in underlying liability coverage, and no losses in the past 5 years, $1,200 would be a reasonable estimate.
Estimated Pricing: $1,200
Commercial Business Owners Policy (Bop) Insurance
The Business Owners Policy (BOP) is a common commercial insurance package that provides comprehensive coverage for property protection, general liability, business interruption and other related risks and exposures that small businesses face on a daily basis. It serves as an essential form of insurance protection for automotive repair shops and other similar small business types by protecting their property, liability exposures, loss of income from interruptions, and lawsuits from employees. Estimated average annual pricing for a BOP for an automotive repair shop is between $2,000-$3,000 based on averaging quotes from top insurers.
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Based on averaging quotes from top insurers for a typical general automotive repair shop with $500,000 in annual revenues, 3-5 employees, and located in a low risk urban area, the estimated average annual pricing for a Business Owners Policy would be around $2,000-$3,000. This pricing takes into account factors like property values, revenue, number of employees, liability limits, and risk characteristics of the business type and location.
Estimated Pricing: $2,000-3,000
Conclusion
In summary, carrying the right types and amounts of commercial insurance gives automotive repair shops peace of mind knowing their business, employees, customers and assets are protected. The policies examined here provide coverage for common liabilities and help ensure operations can continue smoothly even after accidents or losses. Prioritizing insurance is important for mitigating financial risks in this high-hazard industry.