As you set your car dealership up for success, you will need to sign up for a variety of insurance policies. One of them is garage keepers insurance. But what is it and why do you need it? In this article, we will cover everything you need to know about this insurance policy so you can protect your business from liabilities. 

Garage Keepers Insurance Explained

Garage keepers insurance is one of many  policies you will need as a car dealer. It protects your clients’ vehicles when they are in your possession for repairs or services. In some states, it is called storage location insurance, but these names mean the same thing. Overall, it protects the clients’ property from damage caused from fire, theft, vandalism, or collision.¹ 

Who Needs Garage Keepers Insurance?

In addition to car dealers, other businesses that hold onto customer vehicles will take on risk and need insurance to cover it. Those include²:

• Auto body shops
• Custom repair shops
• Detailers 
• Oil change service points
• Parking garages 
• Emissions and inspections shops 
• Towing companies 
• Valet companies
• Window or electronic repair locations 
• New and used car dealerships

What Types of Coverage Are Available?

There are various coverage types available, each with different policy guidelines and risk mitigation potential. You will want to research which type best suits the needs of your business, but this is a list of the options available through most insurance providers: 

1. Legal liability: This coverage is most common and only will cover your losses when one of your business’s employees is the cause of damage, regardless of whether that is due to a mistake or negligence. 
2. Direct primary: This is a step above legal liability and covers issues regardless of who is at fault. It isn’t limited to employee mistakes/negligence, so it will give business owners enhanced peace of mind with wider coverage. 
3. Direct excess: This coverage is less common but is often cheaper than direct primary coverage. Like secondary coverage, it covers losses that go beyond the individual’s personal auto insurance. It only works if your business is not at fault in the claim. 

Within your plan, you will see the following breakdowns that are similar to other insurance types: 

• The per-occurrence limit: This indicates how much insurance coverage you have for every car in a single incident. 
• The per-vehicle deductible: This is the amount you would pay out of pocket for each vehicle in a single incident before the insurance kicks in to cover the rest.²  

What Is Excluded From Coverage?

While garage keepers insurance is essential and can truly save your business from the risk and liability of taking on other people’s vehicles, it’s important to keep in mind that not everything is covered. Here are some issues these policies typically exclude¹:

• A bad repair due to mistakes and faulty workmanship 
• Contractual obligations with a dealer or service provider 
• Vehicle theft executed by your business or employees
• Loss of audio equipment that is not part of the vehicle’s standard permanent installation 
• Radar detection equipment 
• Defective auto parts 
• Damage to personal items that were in the vehicle 

These policies are meant to cover the main aspects of the vehicle, like the body or engine, not the items in the car (even if they’re in the trunk or glove compartment). If you want coverage for those items, consider personal property insurance or other insurance types as add-ons.²

Additionally, since it doesn’t cover faulty workmanship, you would need professional liability insurance to protect your business against those types of claims. 

How Much Does Garage Keepers Insurance Cost? 

When looking for a policy, many auto dealers wonder what kind of price range they should expect. While this is understandable, there is unfortunately no set cost to provide. The cost of the insurance is determined by the provider based on factors like the location of your business, your vehicles, the size of your business (measured by revenue and number of vehicles serviced), the coverage limit you sign up for, and the deductible amount you choose. The final two factors are items you can choose, but speak to your desired insurance provider to get a quote. They will be able to provide you with an accurate estimate based on your business’s specifics.³ 

Partner With ACV Auctions 

If growing your business for long-term success is your number one priority, work with ACV Auctions. Our online auctioning platform will help you get the best inventory on your lot. Each of our vehicles is individually inspected by a trusted member of our team and comes with a detailed report so you know exactly what you’re bidding on. Launch your business to the next level and get started today.

Sources

1. Thimble. “Garage keepers insurance 101.” Thimble. Retrieved January 18, 2024. https://www.thimble.com/small-business-insurance/garage-keepers-insurance 
2. Insureon. 2023. “Garage keepers insurance” Insureon. Retrieved January 18, 2024. https://www.insureon.com/auto-services-business-insurance/garage-keepers-insurance 
3. Lam, Jackie. 2023. Garage keepers insurance: Coverage & cost.” Forbes Advisor. Retrieved January 18, 2024. https://www.forbes.com/advisor/business-insurance/garagekeepers-insurance/