Auto Repair Shop Insurance

What insurance does an auto repair shop need?

A repair shop has a risk most businesses don't: you hold other people's cars, often worth tens of thousands of dollars each. That is why shop insurance usually has two liability pieces.

General liability (often sold as garage liability for auto businesses) covers third-party injuries and damage caused by your operations, such as a customer tripping in the waiting area. Garagekeepers coverage protects customers' vehicles while they are in your care, custody or control, for example from fire, theft, vandalism or collision during a test drive. Standard general liability often excludes damage to property in your care, so garagekeepers fills an important gap.

Add commercial property for your building, lifts and inventory (or a business owner's policy if you qualify), workers' compensation for employees, and tools and equipment coverage for tool sets and scanners.

How much does auto repair shop insurance cost?

Insureon's 2026 data from 100,000 small-business customers shows overall medians of $45 a month for general liability, $83 a month for a business owner's policy, $108 a month for commercial property and $54 a month for workers' compensation. Insureon does not publish an auto repair median, and shops often pay more because of the vehicles, tools and payroll involved.

Your premium depends on:

• Number of bays and employees
• Value of customer vehicles you hold
• Services (body work, painting, towing and performance work change the risk)
• Building and equipment values
• Location, claims history, limits and deductibles

Estimate your total with our business insurance cost calculator.

Example claims (illustrative)

• Example: A fire in one bay spreads and damages three customer cars. Garagekeepers coverage can help pay for the vehicles; property coverage can help with the building.
• Example: A technician dents a customer's car while backing it out. Garagekeepers can respond.
• Example: A customer slips on an oily floor in the service area. General liability can help with medical bills and legal costs.
• Example: A mechanic is burned by hot coolant. Workers' compensation can cover treatment and lost wages.

Is insurance required for auto repair shops?

Workers' comp is required in most states once you have employees; see workers' comp requirements by state. Some states or cities register or license repair shops and may set their own rules. Landlords and lenders usually require property and liability coverage in leases and loans.

Garagekeepers: legal liability vs. direct coverage

Garagekeepers is often offered in versions that pay only when you are legally liable, or that pay regardless of fault. The difference matters when damage happens without negligence, such as a hailstorm. Ask your agent which version you are buying and how deductibles apply.

Towing, test drives and customer cars

Test drives are a common source of claims. A technician driving a customer's car on public roads creates auto liability exposure, and damage to the car itself is typically handled under garagekeepers coverage. Set rules on who can test drive, how far and when, and log every test drive.

Towing adds another layer. If your shop owns tow trucks, you'll need commercial auto for the trucks, and coverage for vehicles being towed may require a separate on-hook coverage. Ask your agent how vehicles are covered while they are being towed and while stored on your lot.

Faulty work and completed operations

A repair can fail after the customer drives away, for example brakes you replaced or a wheel that wasn't torqued properly. Injuries or property damage caused by your completed work may be covered under the completed operations part of a general or garage liability policy, depending on the policy. The cost to redo your own faulty work is generally not covered. Ask your agent to explain how completed operations coverage works on your policy.

Property and business interruption

A fire, flood or major theft can close a shop for weeks. Commercial property covers your building (if you own it), lifts, parts and equipment, and business interruption coverage, often included in a business owner's policy, can replace lost income while you rebuild. Insureon reports a median of $108 a month for commercial property and $83 a month for a BOP across small businesses.

Questions to ask before you buy

1. Is my garagekeepers coverage legal liability or direct coverage?
2. What limit do I need for the cars on my lot at one time?
3. How are test drives and towed vehicles covered?
4. Does my policy include completed operations coverage?
5. Is business interruption included, and for how long?

Specialty shops

Not every shop has the same risk. Body and paint shops handle paint booths and flammable materials, which can raise property and fire risk. Tire shops face wheel-off claims if lug nuts aren't torqued correctly. Mobile mechanics work at customers' homes and need auto coverage that allows business use, plus tools and equipment coverage for gear in the van. Performance and custom shops may work on high-value vehicles that need higher garagekeepers limits. Tell your insurer exactly what kind of work you do, because coverage that fits a general repair shop may not fit a specialty operation.

How to lower your premium

• Keep customer cars locked inside overnight when possible.
• Install fire suppression, alarms and cameras.
• Keep floors clean and enforce shop safety rules.
• Set a clear test-drive policy and limit who drives customer vehicles.
• Bundle policies and review limits every year.

Related: delivery driver insurance and commercial auto insurance.