Why You Need Garage Liability Insurance | Archway Insurance

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Why You Need Garage Liability Insurance

Posted by  On January 1, 2021
Why You Need Garage Liability Insurance

You’ve decided to pursue your passion for running your own automotive business. Whether it’s being a mechanic, car detailing or running a repair shop, you’re working with cars. Following your love is a great thing, but it still makes sense to be safe as taking unnecessary risks can damage your business and your chances of success.

That’s why you must get garage liability insurance. This coverage provides targeted support for all businesses that work with automobiles and protects you from a broad range of financial liabilities. More importantly, it will ease your stress about inadvertent risk while simultaneously providing coverage for your business, employees, shareholders, and partners.

If you need help setting up a garage liability insurance policy in Atlantic Canada, feel free to reach out to Archway Insurance. Once you see all the potential benefits of this coverage, you won’t look back.

What is garage liability insurance?

To start covering your automotive business, garage or otherwise, you need to get a set of policies that will provide coverage for the major liabilities in your workplace.

There are two main components to a comprehensive protection plan capable of protecting your organization and its staff.

Commercial General Liability Policy

The first is one that basically every business owner should have as it focuses on the most common risks in the day-to-day business operations of your workplace.

Mainly, it’s designed to protect you if you are found legally responsible for bodily injuries or property damage to a third party.

As an example, if someone were to slip and fall on your premises, injuring themselves, they may opt to take legal action to seek compensation. Insurance in this area will protect you from these costs. Some commercial general liability policies can also include employee benefits program liability, medical payments, and personal and advertising injury liability. However, the main focus is generally on bodily injury and property damage.


This is the second policy you should add, and it’s one much more specialized in the automotive field. The title SPF#4 refers to a standard garage auto policy. It is focused on covering damage that may result from garage operations.

It also specifically covers liability during automotive business, including injuries or property damage that afflict a third party.

Similarly to the general policy mentioned above, garage liability will protect your automotive operations from any legal action taken against you by a client who either gets injured on the premises or is pursuing action because of property damage incurred.

Premiums on this policy can depend on the number of employees at your workplace, as well as other personal insurance policies you have.

Here are some of the operations that this policy can cover:

  • Wholesale and Retail Auto Dealer
  • Parking Lot
  • Service Station
  • Repair Garage
  • Storage Garage
  • Tow Truck Operations

What Garage Liability Insurance Doesn’t Cover

Some other standard exclusions include injuries to employees, product recall costs, damage and injury caused by pollution, and any professional or organized demolition or racing activities. However, you can expect employee injuries to be covered as long as you have Worker’s Compensation Insurance of some kind.

You can also expect to be on the hook for faulty workmanship. If an employee was negligent and damages the client, don’t expect the insurance policy to help you. They won’t cover the machinery you use for the job either. And in extreme natural disaster cases, compensation usually won’t be provided for damages due to floods, hail, fire, or earthquakes.

Likewise, if you have to close your doors for whatever reason, the insurance company’s garage liability insurance will not provide coverage. For that, you need business interruption insurance.

Lastly, be careful around things left within the client’s car. These personal belongings, like cash and jewelry, are not protected by your liability policy.

How Garage Liability Insurance Works

As already covered, garage liability insurance is generally sold in combination with other commercial insurance policies. It provides coverage specific to garage operations that go beyond the limits of traditional commercial general liability insurance. You will want this sort of coverage as an additional set of protections if you work in a field where you’re more likely to be sued or held responsible for property and bodily damages. Naturally, if you run an auto shop, you’ll want this level of insurance.

The SPF4 or standard garage automobile policy most specifically covers your client’s vehicles while in your custody, control, or care. Whether or not you run a repair garage this coverage is a must for anyone doing auto detailing, towing or in any way working on or operating a client’s vehicle.

As mentioned above, the coverage is focused on damages from direct garage operations, an area that is not included in most commercial and business liability policies. Make sure that your policy will expand on existing coverage and not replace it entirely.

Otherwise, garage liability insurance works the same as any insurance policy. Apply to get a quote, pay premiums, and reach out to your provider when an accident or incident occurs that requires compensation. As long as you know your coverage’s limits, you can rest easy knowing a single mistake won’t bring your business tumbling down.

Final Thoughts

There are several reasons to get garage liability insurance for your Atlantic Canada business if you don’t already have it. It’s not worth running an automotive business without it, as the inherently risky nature of the industry means you’re more likely to run into issues that require external help.

If you understand how the insurance works and what it does and does not cover, you’re well on your way to a safe, stable business.

Remember that for a business, a single policy might not be enough. You may have to get broader insurance coverage that includes general business liability and business interruption coverage. If you want to be safe, it might even be useful to get garage-keepers insurance, as it’ll cover the areas that garage liability leaves out, providing extra safety padding.

At Archway Insurance, our brokers work with major providers in Canada and tailor coverage options to the needs of Nova Scotia and New Brunswick garage facility operators. For more information about garage liability insurance, call Archway Insurance at 1-833-536-0529 or contact us here.

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