Garage Liability Insurance

What is 'Garage Liability Insurance'

Garage liability insurance is purchased by automobile dealerships and repair shops to cover property damage and bodily injury resulting from operations.

BREAKING DOWN 'Garage Liability Insurance'

Garage liability insurance provides coverage for the day-to-day operations of an automobile business. It also covers vehicles owned by the policyholder but does not cover accidents or damage to cars that are brought on site. Additional insurance is required for such cases. Dealership and repair shop owners also can incorporate the businesses to limit personal liability. Without incorporation, an accident that exceeds the garage liability insurance coverage might could cost the owner out-of-pocket money.

Other liability insurance

Garage liability is a type of business liability insurance. Commercial insurance policies have different levels of coverage. A policy may include premises coverage, which protects the business from claims on location during regular business operations. It may also include coverage for bodily injury and property damage resulting from finished products. Excess liability coverage can be purchased in order to cover insurance claims that exceed the limit of the basic policy. Some business liability policies may have coverage exclusions.

There are two types of commercial liability policies, claims-made and occurrence. A claims-made policy provides coverage for a specific period and covers claims made during that period even if the claim event was earlier. An occurrence policy covers claims provided that the claim event occurred during a specified period and does not cover claims stemming from claim events that occurred before the policy went into effect.

Businesses may purchase coverage for other business risks. Employment practices liability insurance protects from claims associated with sexual harassment, wrongful termination and discrimination. Professional liability coverage insures against negligence claims that result from mistakes or failure to perform. Property insurance covers equipment, signage, inventory and furniture in the event of a fire, storm or theft. However, additional coverage is needed to cover events such as floods or earthquakes. Business interruption insurance compensates a business for lost income during events that prevent normal business operations.

A company may name other companies or individual as additional insured under its commercial liability insurance policy. For example, if an automobile repair garage enters into a contract with another company to provide cleaning services for its facility, that company may require the garage owners to add it as additional insured on their garage liability coverage. Workers' compensation insurance is mandatory for employers to protect employees and to cover injured employee’s medical care. It also provides lost wages and death benefits to a deceased worker’s immediate family.