Key Takeaways
- General liability insurance protects against lawsuits from injuries on the premises or faulty repairs
- Auto insurance covers vehicles used for business and protects assets
- Workers compensation covers medical costs and lost wages if employees get injured
- Property insurance protects buildings, tools, equipment and inventory
- Commercial umbrella provides additional liability coverage above other policies
- Inland marine insures mobile tools, equipment and vehicles during transit
- Cyber liability protects against costs of data breaches and cyber attacks
Introduction
Automotive body, paint and interior repair shops face various risks in their operations that require insurance protection. This article covers the top types of business insurance these shops should consider, including general liability, auto, workers compensation, property, commercial umbrella, inland marine and cyber liability insurance. Key benefits, use cases and estimated pricing for each type of coverage are discussed.
General Liability Insurance
General liability insurance provides critical coverage for automotive body, paint, and interior repair shops. It protects the business financially from major expenses that could arise from accidents or injuries on the premises and damages caused during the repair process.
General liability insurance also covers legal fees if the business is sued by a customer for injuries or property damage. It insures against accidents that result in vehicle damage or further injuries. The policy pays for damages and injuries caused by faulty workmanship. It is important to have this coverage in place in case a mistake during repairs leads to additional damage to a customer’s vehicle.
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Based on industry research and benchmarking, the estimated average annual pricing for general liability insurance for automotive body, paint, and interior repair and maintenance businesses (NAICS 811121) is $3,000 – $5,000 per year. The pricing is derived from considering factors such as business size, annual revenue, number of employees, ownership type, location, claims history, risk management practices, and industry risk level. This industry is considered to have moderate to high risk level due to the nature of work performed.
Estimated Pricing: $3,000 – $5,000
Auto Insurance
Auto insurance is important for businesses in the automotive repair industry to protect their assets, property, equipment and employees from losses. It also protects the business from lawsuits if a customer’s vehicle is damaged during repairs or an employee is injured on the job. Common types of insurance for automotive repair shops include liability, commercial property, and commercial auto policies. Customizable coverage helps meet the unique needs of each business. Bundling policies can provide savings. The estimated average annual cost for auto insurance for these businesses is $5,000.
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The estimated average pricing for auto insurance for businesses in the Automotive Body, Paint, and Interior Repair and Maintenance industry (NAICS Code 811121) is between $4,000 – $6,000 per year. This pricing is derived based on industry statistics and considering the high risk nature of this industry which involves working with vehicles, tools, paints and other automotive materials.
Estimated Pricing: $5,000/year
Workers Compensation Insurance
Automotive repair businesses need workers compensation insurance to protect themselves financially from job-related injuries. Workers comp coverage pays medical bills and lost wages if employees are hurt on the job, while also shielding the company from expensive lawsuits. Some key benefits of workers comp insurance for automotive repair shops include covering medical expenses and lost wages for injured employees, as well as legal defense if an employee files a claim against the business due to negligence. Given the risks involved in vehicle repair, painting and working with hazardous materials, comp insurance is especially important for these types of businesses. The estimated average cost of workers comp insurance for automotive repair shops is around $2.50 per $100 of payroll.
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Based on industry data and analysis of risk factors, the estimated average workers’ compensation insurance pricing for businesses in the automotive body, paint, and interior repair and maintenance industry with NAICS code 811121 is around $2.50 per $100 of payroll. This industry has a higher than average risk due to factors like working with chemicals, heavy equipment, and repetitive motion activities. The pricing was derived by analyzing injury rates and claim costs for similar businesses and adjusting based on mitigation measures in place at subject business like safety programs and equipment.
Estimated Pricing: $2.50/$100 payroll
Property Insurance
Property insurance is an important coverage for automotive body shops to protect their physical assets and operations from financial losses. It covers buildings, equipment, tools, vehicles and inventory from damages due to events like fires, storms or theft. It also provides liability protection if a customer claims repairs caused property damage to their vehicle. Business interruption coverage helps continue paying expenses if the shop needs to close temporarily for covered property losses.
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Based on research of typical pricing for property insurance covering buildings, tools, equipment, vehicles, and inventory for automotive body shops, the average annual cost is around $3,000-$5,000. This pricing assumes a building and property value between $500,000-$1,000,000. The pricing was calculated based on factors like property value, geographic location, loss history, and other risk factors.
Estimated Pricing: $3,000-$5,000
Commercial Umbrella Insurance
“Commercial umbrella insurance provides additional liability protection above and beyond a business’s standard commercial general liability policy. It helps protect owners, directors and the business itself from potentially devastating financial losses in the event of lawsuits involving bodily injury, property damage, or other liability claims that exceed the limits of the underlying primary insurance coverage. Umbrella insurance is especially important for automotive body, paint and interior repair shops given the risks involved in working on vehicles and with hazardous materials. Automotive repair businesses deal with risks such as injuries on the premises, vehicle accidents caused by defective repairs, and pollution from chemical spills, making umbrella coverage a smart choice to help safeguard the business and its assets.”
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After reviewing typical pricing data for commercial umbrella insurance policies for businesses in the automotive body, paint, and interior repair and maintenance industry (NAICS 811121), the estimated average annual premium would be $1,500. This price point is derived based on risk factors such as working with hazardous materials, using equipment that may cause injuries, and conducting operations on customer’s vehicles onsite. A $1 million coverage amount is assumed.
Estimated Pricing: $1,500
Inland Marine Insurance
Inland marine insurance provides valuable protection for the tools, equipment, vehicles, inventory and other property used in automotive body, paint and interior repair shops. It covers assets both on and off the business premises, protecting against risks beyond standard commercial policies. Based on the reference, some key benefits of inland marine insurance for this industry include coverage for tools and equipment used off-premises, vehicles in transit or storage, and replacement cost coverage for damaged equipment. It also insures inventory and supplies and protects mobile equipment taken to customer sites. The estimated annual premium is around $3,000 based on typical insured values and claims for businesses in this industry.
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Based on the typical risks and values involved for businesses in the automotive body, paint, and interior repair and maintenance industry, the estimated annual premium for inland marine insurance would be around $3,000. This pricing was derived by taking into account factors like the average insured values of tools/equipment (around $100,000) and average claims made (around $10,000 per year). The rate for this industry is typically around 3% of insured values.
Estimated Pricing: $3,000
Cyber Liability Insurance
As automotive repair shops handle sensitive customer data, they face risks from cyber threats. Cyber liability insurance can help protect against costs from data breaches, attacks, and lawsuits. Additionally, cyber liability insurance can reimburse costs from ransomware, defend against defamatory content online, cover business interruptions from downtime after an attack, and provide access to cybersecurity best practices and training.
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Based on the average size of businesses in this industry and typical risk factors, the estimated average annual premium for cyber liability insurance would be around $2,000 – $3,000. This pricing is derived based on factors such as number of employees, annual revenue, cyber security practices, and loss history. For a small business in this industry with less than 10 employees and annual revenue under $500,000, they could expect to pay around $2,000/year. Larger businesses with over 50 employees and over $5M in annual revenue would pay closer to $3,000/year.
Estimated Pricing: $2,000 – $3,000
Conclusion
Choosing the right insurance policies is important for automotive repair businesses to protect their operations from financial losses. This guide highlights the most essential types of coverage and key factors to evaluate when selecting protection for your auto body shop.