Mechanics need business insurance in case the unexpected happens. At minimum, garage owners should have:
Garage liability insurance. Helps pay for injury and property damage to people outside your business.
Garage keepers insurance. Pays if a customer’s vehicle is damaged or stolen while in your care.
Commercial property insurance. Covers your shop and the tools and equipment inside it.
Workers’ compensation. Pays for injuries that happen on the job, including medical care, lost wages and therapeutic costs.
Larger operations, mobile mechanics and shops that handle higher-risk work will likely need more coverage. Here are the policies to consider, plus where to start your search for them.
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Best insurance companies for mechanics
Relative number of complaints to state regulators for each company.
Financial strength, meaning how well a company can pay claims.
How easy it is to get a quote and buy a policy online.
We reviewed the top carriers for companies that offer policies tailored for mechanics. NerdWallet recommends comparing multiple quotes to find the best coverage at the best price.
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Best for business owner’s policy
Mechanics and garage owners can likely find all the insurance they need at The Hartford. It offers business owner’s policies that combine general liability with property coverage, and garage keepers is available as an add-on. You can also get workers’ compensation and coverage for data breaches or faulty work.
Best for garage liability coverage
Auto-Owners is only in 26 states. But if you work in one of them, consider its dedicated garage insurance program. It includes garage liability and garage keepers policies, as well as specialized options like mechanics errors and omissions. You can get workers’ comp, commercial property and more as well. Plus, Auto-Owners offers bundling discounts.
Credit rating company AM Best gives Auto-Owners its highest rating possible. It got far fewer complaints about its workers’ comp and commercial auto programs than we’d expect given its size. You’ll need to work with an agent to get coverage. (NerdWallet has not written a full review of Auto-Owners business insurance.)
For an auto repair shop policy you can buy online in minutes, consider Ergo Next. The carrier has bundled mechanic policies in three coverage levels that include general liability and property coverage. The two higher levels include garage keepers and faulty work coverage.
Best for equipment breakdown coverage
A business owner’s policy from Nationwide includes equipment breakdown coverage, an uncommon feature. You can also buy garage keepers insurance. Together with a BOP or garage liability, this will cover any damage to your customers’ cars while in your care.
Why do mechanics need insurance?
Few businesses face the number of unique risks auto repair shops do. Insurance pays when issues arise so your business doesn’t have to.
Business insurance can help cover costs for the following scenarios:
A customer vehicle is damaged in your care, or gets stolen off the lot overnight.
An employee strains their back on the job and needs physical therapy.
Your faulty wheel repair leads to an accident.
A customer trips over a wire and falls, requiring medical care.
Your tech has an accident during a test drive.
The shop catches fire, or is damaged in a windstorm, and you can’t operate.
You incur a data breach where customer information is stolen.
What types of insurance do mechanics need?
Garage liability insurance
Garage liability insurance covers bodily injury and property damage to non-employees from your business operations. It also includes coverage for accidents involving customers’ vehicles while in your care. For instance, if a mechanic is moving or driving a customer’s car and causes property damage or injuries to a non-employee, garage liability pays.
A garage liability policy may also include faulty work coverage. Also known as completed-operations liability, this pays for property damage and injuries if you or an employee’s faulty work causes an accident.
Garage liability insurance only pays out to third parties, or non-employees. It doesn’t cover damage to your shop or injuries to your employees. It also excludes damage to your customers’ vehicles — for that, you’ll need garage keepers insurance.
Can mechanics opt for general liability insurance instead?
You may be able to address those issues with a customized general liability policy from some carriers. But whatever route you choose, your liability insurance should cover all of the following. If you’re not sure if a policy does, confirm with the insurer.
Coverage
Example
Bodily injury
A customer is injured in your shop and needs medical care.
Property damage
A shop mechanic accidentally spills coffee in a customer’s car and ruins the upholstery.
Advertising injury
Your competitor claims your social media ad included a lie about their shop.
Garage liability
A tech rear-ends another vehicle while driving a customer’s car to diagnose a funny noise the engine is making.
Faulty work
Your employee replaces brake pads that fail the following week, causing a fender bender.
This policy covers damage to a customer’s vehicle while it’s in your care. It can come in three different versions for auto mechanics:
Legal liability. This pays only when you’re legally responsible for the damage. It excludes vandalism, weather, and theft, for example.
Direct primary. This pays for damage regardless of fault and covers things like weather, vandalism and theft.
Direct excess. This pays for damage regardless of fault, but only after the customer’s own insurance is exhausted.
For example, all three policies cover vehicle damage that employees cause by test driving or moving customers’ cars on-site. But only direct policies pay for vandalism, hail or an overnight theft, and only a direct primary policy would guarantee payment.
A direct excess policy might not pay to repair damage to a customer’s car, or it may pay only the deductible. It would depend on whether the customer had comprehensive coverage on their personal auto policy.
Commercial property insurance
However, policies typically exclude floods and earthquakes. Additionally, insurance only protects tools and equipment at your business property — mobile mechanics need a separate inland marine policy.
For example, say a grease fire burnt a hole in the side of your auto repair shop. It ruined all the nearby tools, melting their rubber grips into a workbench. Commercial property insurance pays for the repair to the wall and workbench, plus the cost to replace the tools. Business income insurance pays some of your bills and payroll while the shop’s being fixed.
Workers’ compensation insurance
Most states require workers’ compensation if you have employees. But this coverage is critical even if you’re a sole proprietor or mobile mechanic.
For example, say a tool falls from atop an engine while you’re underneath the vehicle. It hits you in the eye and causes a nasty gash on your forehead. Even if you’re self-employed, your health insurance would not cover this claim. But workers’ comp would, including costs for physical or occupational therapy and a portion of lost wages.
Other types of mechanic insurance
Policy type
Coverage details
This is a must if you own or operate vehicles for the business, including mobile-mechanic vans, tow trucks and supply vehicles. A personal auto policy generally won’t cover an accident that happens during business use.
Say a mobile mechanic is driving to a service call and rear-ends another driver. Commercial auto would pay for the damage to both vehicles and any injuries to the other driver.
Tools and equipment insurance
Covers tools, diagnostic computers, lifts and equipment while in transit, at a worksite or stored off-premises. Commercial property usually only covers items at your business address.
Say a mobile mechanic’s tool chest is stolen out of the work van overnight. Tools and equipment coverage helps pay to replace it.
Employee tools coverage
This covers tools your technicians own but kept in the shop. Many techs own $20,000 or more worth of personal tools, and standard commercial property typically doesn’t cover them.
Say someone breaks in and clears out three rolling tool chests that belong to your techs. Employee tools coverage helps pay to replace them.
Pollution liability insurance
Standard general liability and BOPs typically exclude or sharply limit pollution claims. Mechanics handle toxic chemicals like brake fluid, antifreeze and solvents. All of these can trigger pollution claims if they leak or spill.
Say leaking oil contaminates the soil under your shop and the government orders a cleanup. Pollution liability would help pay for the investigation, cleanup and any of your neighbors’ claims.
Equipment breakdown coverage
Pays for repairs or replacement when motorized or electrical equipment fails due to a covered event (not wear and tear). This can include lifts, alignment racks, diagnostic computers and air-compressors.
For example, a power surge fries your shop’s diagnostic scan tools and computer-controlled alignment rack. This coverage helps pay to repair or replace them.
Faulty work, or completed-operations coverage
Pays for claims that your repair caused an accident or other financial loss. General liability policies typically exclude the cost to redo your own work.
Say a brake job fails after three weeks and the customer rear-ends another vehicle. Faulty work coverage helps pay for the damage and any injuries.
On-hook towing coverage
You need this if you tow customer vehicles. It covers them while attached to your truck and in transit.
If a tow-truck driver drops a car on the road in transit, on-hook towing helps pay to repair or replace the customer’s vehicle.
Pays costs related to data breaches, ransomware and other cyberattacks. Worth a look if you use shop-management software, vehicle inspection tools or accept credit card payments.
Say ransomware hits your shop-management system and exposes customer payment data. Cyber insurance helps with the investigation, the required customer notifications and any legal fees.
Umbrella coverage effectively increases the limits of your other business liability policies. It’s worth considering if you do high-value work, store exotic vehicles or have contracts that require higher limits.
Say a test-drive accident judgment exceeds your $1 million garage policy limit by $500,000. Umbrella would help pay the rest, up to its own limit.
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NerdWallet Small Business helps you get real-time quotes from 30+ insurers, and instant access to your Certificate of Insurance (COI) through our partner, Coverdash.
What to watch out for in mechanic insurance
Insurance carriers often exclude services or otherwise limit the risk they will take on. Mechanics will typically need to purchase a separate policy or buy an endorsement to cover these gaps. Watch out for the following when insuring your auto repair business.
Ensure complete coverage of customer vehicles in your care
General liability policies cover property damage to non-employees — except when that property is a car you’re working on. If you store cars outdoors in your lot overnight, primary (not legal liability) garage keepers insurance pays out for theft, vandalism or storm damage costs. And if you want to ensure claims from this policy are fulfilled, you may need security measures in place, such as cameras and fencing with a locked gate.
🤓 Nerdy Tip
Garage keepers insurance policies often have starting limits around $1 million per claim. Consider raising those if you have a large storage lot or work on expensive vehicles like high-end cars, RVs or heavy equipment.
Mobile mechanic coverages
Additionally, some garage and general liability policies for auto shops exclude off-premises operations. Make sure your policies don’t. Or get an endorsement if you work off the business property.
Check on coverage for employees’ tools and equipment
Standard property insurance only covers tools and equipment the business owns. If your shop is like many where mechanics buy and use their own tools, check on an endorsement for employee tool coverage. This way if there’s damage or theft, all the tools are replaced and you’re back in business sooner.
Should mechanics get risk management services?
Risk management is usually a suite of services insurers offer a business to improve safety, reduce costs and limit insurance claims. These services can pay off for mechanic shops, given the profession’s high injury rate.
Examples of risk management services include:
Safety inspections, including for lifts, jacks and racks.
Employee training on lifting technique, hazardous-material handling and OSHA-required programs.
Help preparing for environmental compliance audits.
If your shop is large, has high employee turnover or handles specialty vehicles, it’s worth asking carriers what services it includes.
How much does mechanic insurance cost?
Business insurance for mechanics can be relatively affordable, especially if you choose bundled or combined options like a business owner’s policy. Here are some median annual costs for select mechanics policies, according to data shared with NerdWallet by online brokerage Coverdash:
Business owner’s policy: $4,200 per year.
General liability: $2,200 per year.
Workers’ compensation: $3,500 per year.
The type of work you do.
Your shop size and revenue.
Where your shop is located.
Loss and claims history.
How much coverage you choose.
For example, a towing company with eight trucks and twelve employees that frequently crosses state lines will have higher costs than a sole proprietor. The best way to get a good deal is to compare quotes from multiple companies before you buy your policies.
How to shop for mechanic insurance
Follow these steps to assess your risk and compare multiple quotes for the policies your auto repair business needs.
1. Identify coverages and gather documentation
At minimum, you’ll need:
Garage liability (or general liability with garage coverage).
Garage keepers insurance.
Commercial property insurance.
You’ll need workers’ comp if you have employees, but you should also consider it if you’re a sole proprietor. Add commercial auto if you operate vehicles or are a mobile mechanic and specialty endorsements based on your work.
Then, gather all the documentation related to those risks and your business. In addition to business details like address, payroll, revenue and time in operation, you’ll need business vehicle information.
Employers need their federal employer identification number, while sole proprietors need their Social Security number.
2. Get quotes from multiple insurers
To compare multiple policies, there are three common options.
Contact an agent or broker. An insurance expert can walk you through policies, explain exclusions and endorsements and answer questions. They can also get the quotes for you, but only from their own network of insurers.
Get quotes directly. If you know the insurer you want to work with or have a shortlist in mind, you can contact them directly for quotes. This puts you firmly in control of your shopping experience, but may be time consuming — especially if each carrier requires you to speak with an agent.
Use an online marketplace. This is the simplest method, where you go to a single site like Insureon or Coverdash and get multiple quotes from their network of companies. You can easily compare coverage and likely buy online from their network, but you may not have access to an agent if questions arise.
3. Compare limits, exclusions and companies
This step is very important for auto repair business owners. Read all policy language for:
Legal liability vs. direct primary vs. direct excess garage keepers coverage.
Faulty-work and pollution exclusions.
Off-premises coverage if you do mobile work.
Per-vehicle limits if you handle high-value cars.
4. Buy policies and review them annually
Revisit coverage if you add bays, hire employees, open a second location or take on contracts that require higher limits. Outside of that, review your policies annually to ensure they still cover your business fully.
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