Running an auto body shop comes with unique risks, from accidents in the garage to damage to expensive customer vehicles. This makes it essential for auto body shop owners to understand the different coverages available to protect their business adequately. The right auto body shop insurance policy protects against costly claims, accidents or unexpected liabilities.

What Is Auto Body Shop Insurance?

Auto body shop insurance is a comprehensive policy designed to cover the specific risks auto repair shops face, including damage to customer vehicles, employee injuries and property damage. This type of automotive repair shop insurance usually combines several types to provide complete protection.

One of the primary purposes of auto body shop insurance is to protect your shop from liability in the event of accidents, property damage or injuries. For instance, if a mechanic accidentally damages a customer’s vehicle during a repair, body shop insurance can help cover the cost of those damages. Without this protection, an accident like that could result in substantial out-of-pocket expenses.

What Types of Insurance Do Auto Body Shops Need?

Auto body shops require multiple types of small business insurance to protect against the risks they face.

Liability Insurance

Liability insurance for mechanics covers claims of bodily injury or property damage caused by your business operations. This coverage is vital for any mechanic shop insurance policy, as it protects your shop from costly lawsuits. An accident in your garage could result in significant legal fees and damages without liability insurance.

Additionally, liability insurance also covers accidents related to repair mistakes. For example, suppose your mechanic installs a faulty part and causes an accident. In that case, your liability insurance coverage can cover the damages.

Commercial Property Insurance

This policy protects your building, tools, and equipment from damage or theft. Tool insurance for mechanics is an essential part of this coverage, as tools are often one of the shop's most expensive assets. If your shop experiences a fire, commercial property insurance will help you recover quickly and reduce downtime.

Garage Keepers Insurance

A crucial part of auto body insurance is garage keepers insurance, which covers customer vehicles while in your care. Whether a car is damaged in your garage or stolen from your lot, garage keepers insurance protects you from paying for repairs or replacement out of pocket. This is critical for body shops since accidents or thefts involving customer vehicles can result in expensive claims.

Workers' Compensation Insurance

If you have employees, you will need workers' compensation insurance to cover their medical expenses and lost wages in the event of a workplace injury. This policy ensures that your employees are taken care of if an accident occurs. It is legally required in most states and protects your business and employees.

Business Interruption Insurance

Suppose your shop temporarily closes due to a covered event. In that case, business interruption insurance helps cover lost income and ongoing expenses like payroll and rent. This coverage is significant for auto body shops, as unexpected closures can result in substantial revenue loss. Including business interruption insurance in your policy ensures your business can recover quickly from events like natural disasters.

Cyber Liability Insurance

As auto shops increasingly adopt digital systems, cyber liability insurance protects against data breaches and cyberattacks. This coverage is essential if you handle customer information or use software to manage your business.

Why Do Auto Body Shops Need Insurance?

Auto body shops face numerous risks that can lead to significant financial losses if not adequately insured. From accidents involving customer vehicles to potential legal liabilities, having the right insurance financially protects against these unpredictable events.

  • Protection against liability claims: Auto body shops handle high-value vehicles, and any damage to a customer’s car during repairs can lead to costly liability claims. Liability insurance for mechanics covers these claims, protecting your business from having to pay out of pocket for damages or legal fees.
  • Coverage for property damage: Damage to your shop's equipment and tools, whether caused by a fire, storm, or theft, can severely impact operations. Commercial property insurance ensures that you can quickly repair or replace essential items.
  • Employee protection: Auto body shop employees work in potentially hazardous environments, and accidents can happen. Workers' compensation insurance covers medical expenses and lost wages if an employee is injured.

Factors that Affect Auto Body Shop Insurance Cost

Auto body shop insurance costs vary significantly depending on several factors specific to your business. One of the primary factors is the size of your shop. Larger shops may have more employees, tools and customer vehicles on the premises, which typically require higher coverage limits, driving up the overall cost. Additionally, your business location plays a role — shops in areas with higher crime rates or greater exposure to natural disasters may face higher premiums due to the increased risk.

Another key consideration is the types of coverage you select. Comprehensive policies that include multiple coverages, such as liability insurance, garage keepers insurance and workers' compensation, tend to be more expensive than basic plans. However, obtaining more extensive coverage protects your shop against broader risks.

How to Find the Right Auto Body Shop Insurance

Here are some steps to help you find the right body shop insurance:

  1. 1
    Evaluate potential risks

    Every auto body shop faces unique risks, from employee injuries to property damage. Start by identifying the most significant risks in your shop, such as accidents involving customer vehicles or theft of expensive tools.

  2. 2
    Research different providers

    Take the time to compare options from top insurance providers. Some may specialize in specific coverages, like mobile mechanic insurance or automotive repair business insurance, making them better suited to meet your needs.

  3. 3
    Personalize your coverage

    Not all policies are one-size-fits-all. Customize your insurance to include the types of coverage that best suit your shop’s operations, such as mechanics tool insurance or shopkeepers insurance.

  4. 4
    Explore savings opportunities

    Look for providers that offer bundled packages or loyalty discounts. Combining liability insurance with commercial property insurance might lower premiums.

  5. 5
    Seek expert advice

    If you need help, consult a broker experienced in business insurance for auto repair shops. A broker can help identify the most appropriate coverage for your shop and provide insight into policies that offer the best value.

FAQ: Auto Body Shop Insurance

What kind of insurance does a mechanic need?

Does auto body shop insurance cover theft?

Is workers’ compensation insurance required for auto body shops?

About Mark Fitzpatrick


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Mark Fitzpatrick is a Licensed Property and Casualty Insurance Producer and MoneyGeek's Head of Insurance. He has analyzed the insurance market for over five years, conducting original research and creating personalized content for every kind of buyer. He has been quoted in several insurance-related publications, including CNBC, NBC News and Mashable.

Fitzpatrick earned a master’s degree in economics and international relations from Johns Hopkins University and a bachelor’s degree from Boston College. He is passionate about using his knowledge of economics and insurance to bring transparency around financial topics and help others feel confident in their money moves.