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Auto Mechanic Insurance in Central New York: Protect Your Garage, Tools, and Staff

May 22nd, 2024 | 13 min read

By Daniel J. Middleton

Auto mechanic insurance in Central New York

As a Central New York auto service garage owner, you face unique risks that can threaten the success and stability of your business. From protecting your employees and customers to safeguarding your tools and equipment, the challenges of running a garage can be overwhelming.

We understand that making informed decisions about insurance can be difficult, especially when you're not sure if you're getting the right coverage for your specific situation. You may worry that you'll end up with a policy that doesn't quite fit your needs, leaving your business vulnerable to potential risks and liabilities.

That's why it's critical to have an insurance advocate who not only understands the complexities of your industry but also has the expertise to guide you toward the most suitable coverage options. 

At the Horan insurance agency, we specialize in helping auto service garages like yours navigate the complex world of insurance. As an independent agency working with multiple carriers, we have a unique, informed perspective that allows us to provide tailored solutions for your business.

Since 2009, we've been helping garage owners identify and address their unique risks, providing the expert guidance and broad coverage needed to protect their livelihoods. 

In this article, we'll explore the key insurance coverages every auto service garage should consider, including:

  1. workers compensation
  2. garage liability, and 
  3. tow truck insurance

By reading to the end, you'll have a clearer understanding of how to safeguard your business and achieve long-term success in the competitive world of auto repair.

Jump to Article Section

  1. Why Auto Service Garages Need Specialized Insurance Coverage
  2. Insuring Your Garage's Tools, Equipment, and Inventory
  3. Determining the Right Coverage for Your Equipment
  4. Protecting Your Customers' Vehicles
  5. Test Drive Coverage for Collisions Following Repair or Maintenance
  6. Garage Liability Coverage: Protecting Your Business After the Job is Done
  7. The Role of Workers Compensation in the Auto Repair Industry
  8. The Importance of Disability Insurance and Paid Family Leave for Auto Service Garages
  9. Errors and Omissions Coverage: Protecting Your Business from Faulty Advice and Oversights
  10. Tow Truck Considerations for Auto Service Garages
  11. Start Protecting Your Auto Service Garage with Coverage That Fits

Why Auto Service Garages Need Specialized Insurance Coverage

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As we begin, let's establish that the insurance coverage we'll be exploring is designed for auto service garages

  1. not body shops and 
  2. not car dealerships that also offer repairs. 

While there may be some overlap, auto mechanic insurance is specifically designed to protect businesses that focus on servicing and repairing vehicles.

Auto service garages throughout Central New York face unique risks that general business insurance policies often don't cover. From specialized tools and equipment to potential liability issues, it's crucial to have insurance tailored to your specific needs. That's where auto mechanic insurance comes in.

Insuring Your Garage's Tools, Equipment, and Inventory

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Safeguarding your auto service garage requires properly insuring your valuable tools, equipment, and inventory. The specific insurance coverage you need will depend on whether you own or lease your building.

Property Coverage for Garage Owners

If you own your garage or are responsible for insuring the building, you may be able to cover items like lifts, tire balancers, and alignment machines under your building coverage. Many insurance carriers allow this, so it's worth exploring this option with your provider.

Property Coverage for A Leased Garage Space

On the other hand, if you don't own the building, you'll need to insure these items separately as business personal property. This coverage is essential for protecting your most expensive equipment, such as:

  • Diagnostic machines
  • Lifts
  • Tire balancers
  • Alignment machines

These four items alone often represent the most significant investment in an auto service garage, far outweighing the value of waiting area furniture and other minor equipment.

It's also important to consider your inventory when designing your insurance plan. Most auto service garages don't carry a large inventory, as they typically order parts from suppliers like NAPA as needed. However, you may still have some essential items on hand, such as:

  • Windshield washer fluid
  • Motor oil
  • Brake fluid
  • Transmission fluid

While the value of this inventory may be relatively low compared to your equipment, it's still worth ensuring that your property coverage accounts for these items.

Learn the difference between commercial property insurance and business personal property insurance.

Determining the Right Coverage for Your Equipment

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To ensure that your garage has the right level of protection, it's essential to understand the value of your equipment and how much it would cost to replace in the event of a loss. This is particularly important when considering catastrophic events like fires.

Insuring for catastrophic events, like auto service garage firesFor example, if a fire were to occur in your Syracuse garage, your lifts may appear to be undamaged at first glance. However, the extreme heat could have compromised their structural integrity, making them unsafe to use. 

In this case, you'd need to replace the lifts entirely to avoid putting your workers at risk of serious injury if the equipment were to fail while in use.

Similar considerations should be made for your other expensive equipment, such as the critical four we mentioned above. By properly valuing these items and ensuring that you have adequate coverage, you can protect your business from the financial impact of a catastrophic loss.

When working with your insurance agent or provider, be sure to:

  1. Provide detailed information about your equipment, including make, model, and year
  2. Determine the replacement cost for each item
  3. Consider the potential impact of catastrophic events on your equipment
  4. Review your coverage regularly to be certain it still meets your needs as your business grows and changes

By taking these steps, you can have composure knowing that your auto service garage is properly protected against potential losses, allowing you to focus on providing excellent service to your customers.

Protecting Your Customers' Vehicles

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While insuring your own equipment and inventory is crucial, it's equally important to consider the potential liabilities associated with the vehicles your customers entrust to your care. Two specific coverages are essential for auto service garages: 

  1. customers' auto coverage (also known as care, custody, and control) and 
  2. products completed.

Customers' Auto Coverage (Care, Custody, and Control)

When a customer leaves their vehicle in your care, you become responsible for its safety. If something happens to the vehicle while it's in your possession, even if it's not directly related to the work you're performing, you could be held liable.

For example, let's say a customer's car is parked outside your garage in Baldwinsville, waiting to be serviced, and a severe storm rolls through, causing a tree to fall on the vehicle or hail to damage it. In this case, the customer won't file a claim with their own insurance; instead, you'll need to file a claim under your care, custody, and control coverage.

This coverage typically falls under the comprehensive protection for customers' vehicles. Most insurance carriers who offer coverage for auto garages will cap the total loss, so you won't have to pay a deductible for each damaged vehicle. 

For instance, if you have 10 cars in your lot with a $500 deductible per vehicle, the insurance company may cap your out-of-pocket expense at around $2,500.

While it's always best to store customers' vehicles under cover when possible, many smaller auto service garages with limited bay space may not have this option. In these cases, care, custody, and control coverage is especially critical.

This coverage also extends to other comprehensive losses, such as theft, flood damage, hail, wind, smoke, or any other event that would typically be covered under a personal auto policy's comprehensive coverage.

Test Drive Coverage for Collisions Following Repair or Maintenance

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In addition to protecting customers' vehicles while they're parked at your garage, it's also important to have coverage for when you need to test drive a vehicle after performing repairs or maintenance.

For example, after completing an alignment or addressing a concerning noise, you may want to take the vehicle for a short drive to ensure the issue has been properly resolved. Here in Baldwinsville, this might involve driving up and down E Genesee Street, perhaps past Radisson and Budweiser, to confirm that the car is operating as expected.

During these test drives, there's always a risk of an accident occurring. If you were to hit another vehicle or object while driving a customer's car, the damage would fall under your collision coverage, not the customer's policy.

How Collision Coverage Differs from Care, Custody, and ControlHow Collision Coverage Differs from Care, Custody, and Control

Unlike care, custody, and control coverage, which may have a cap on the total loss across multiple vehicles, collision coverage applies to a single vehicle at a time, as you can only drive one car at a time. This means that if an accident occurs during a test drive, you'll be responsible for paying the deductible (usually around $500, depending on your policy) for that specific vehicle.

Having proper test drive coverage ensures that you're protected in the event of an accident while verifying the quality of your work. It gives you added security knowing that you can thoroughly test a vehicle after servicing it without risking significant financial losses.

When setting up your auto mechanic insurance policy, be sure to discuss your test drive practices with your insurance agent or provider to verify that you have adequate collision coverage for these situations. This is especially important if test drives are a regular part of your quality control process.

Garage Liability Coverage: Protecting Your Business After the Job is Done

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While care, custody, and control coverage and collision coverage protect your customers' vehicles while they're in your possession, it's equally important to have protection for what happens after the work is complete and the customer drives away. 

This is where garage liability coverage comes into play.

The Importance of Garage Liability Coverage

Picture this scenario: you've just completed a repair on a customer's vehicle at your Syracuse garage. You hand them the keys, place the invoice above the visor, and send them on their way, confident that the job was done right. 

However, unbeknownst to you, the repair was not performed properly, leading to an accident that damages the customer's vehicle, injures the occupants, and possibly even causes a collision with another vehicle.

In this situation, garage liability coverage is essential. This coverage protects your business from liability for accidents that occur as a result of faulty workmanship or defective parts after the vehicle has left your care.

Covering Completed Operations

Garage liability coverage, also known as completed operations coverage, ensures that your business is protected even if something goes wrong after you've finished working on a vehicle. This coverage applies whether the issue was caused by a mistake on your part or a defective part that you were unaware of when making the repair.

For example, let's say you replaced a part on a customer's vehicle, and everything seemed fine during the test drive. However, the part was actually defective, and the issue only became apparent after the customer had driven the car for a longer distance. In this case, your garage liability coverage would step in to cover the resulting damages and injuries, even though the part failure was not directly your fault.

Subrogation: When Defective Parts Are to Blame

In some cases, your insurance carrier may determine that a defective part was responsible for the accident. If this happens, they may pursue subrogation against the part manufacturer to recover some of the costs associated with the claim.

For instance, if the faulty part was manufactured by Jones Company Parts out of Illinois, your insurance carrier might take legal action against that company to seek reimbursement for the damages paid out under your policy. This process allows your insurer to hold the responsible party accountable while still ensuring that your customer is taken care of in the meantime.

Why Garage Liability Coverage is a Must-Have

Regardless of the specific circumstances surrounding a post-repair accident, having garage liability coverage is absolutely essential for any auto service business. This coverage offers business protection even after the customer leaves your garage, allowing you to focus on providing quality service without worrying about potential liability issues down the road.

When setting up your auto mechanic insurance policy, be sure to discuss your coverage needs with your insurance agent or provider to assure that adequate garage liability coverage is in place. This is one area where you simply cannot afford to be underinsured.

The Role of Workers Compensation in the Auto Repair Industry

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When it comes to protecting your staff, workers compensation and disability insurance are non-negotiable. If you have a paid staff, you're legally required to provide these coverages to ensure they're taken care of in case of work-related injuries or illnesses.

A CNY mechanic working on a vehicleWorkers comp is especially crucial in the auto service industry, where employees are constantly exposed to potential hazards. From heavy lifting and repetitive motions to working with dangerous tools and chemicals, the risk of injury is high. 

Without proper coverage, a single accident could leave your employee unable to work and your business liable for their medical expenses and lost wages.

But workers comp isn't just about protecting your employees; it also protects your business. By providing this coverage, you're shielding your garage from costly lawsuits and ensuring that you can continue operating even if an employee is injured on the job.

Moreover, having workers comp can help you attract and retain quality employees. When your staff knows that you prioritize their safety and well-being, they're more likely to feel valued and loyal to your business. In an industry where skilled labor is in high demand, this can be a significant competitive advantage.

The Importance of Disability Insurance and Paid Family Leave for Auto Service Garages

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In addition to workers comp, disability insurance and paid family leave are essential components of a robust auto mechanic insurance plan.

  1. Disability insurance provides a safety net for your employees if they're unable to work due to a non-work-related injury or illness. This coverage ensures that they can continue to receive a portion of their income while they recover, which can be a lifeline for both the employee and their family.
  2. Paid family leave, on the other hand, allows your employees to take time off to care for a new child or a seriously ill family member without fear of losing their job or income. It also allows them to support a family member in the military during pre-deployment. This benefit can be incredibly valuable for your staff, as it allows them to prioritize their family obligations without sacrificing their financial stability.

By offering disability insurance and paid family leave, you're demonstrating your commitment to your employees' overall well-being, not just their safety on the job. This can go a long way in fostering a positive work environment and reducing turnover.

Moreover, these benefits can help you comply with state and federal regulations. Many states, including New York, have laws requiring businesses to provide disability insurance and paid family leave. By staying compliant, you can avoid costly fines and legal issues down the road.

Errors and Omissions Coverage: Protecting Your Business from Faulty Advice and Oversights

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While garage liability coverage protects your business from accidents caused by faulty workmanship or defective parts, there's another important type of coverage that auto service businesses should consider: errors and omissions (E&O) insurance

This coverage is designed to protect your business from liability arising from faulty advice or failures to identify potential issues with a customer's vehicle.

The Risks of Professional Advice

As a mechanic, you're often called upon to provide professional advice to your customers. For example, you might recommend a specific type of exhaust system or battery based on your assessment of their vehicle. However, if that advice ends up causing a problem for the customer, you could be held liable.

E&O coverage is designed to protect your business in these situations. While not every insurance carrier offers this type of coverage for mechanics, it's worth considering if it's available, as it can provide an extra layer of protection for your business.

Learn more about professional liability (E&O) insurance.

The Importance of Thorough Inspections

In addition to providing advice, mechanics are also expected to thoroughly inspect a vehicle and identify any potential issues, even if the customer hasn't specifically asked about them. This is where the “omissions” part of E&O coverage comes into play.

Consider this scenario: a customer brings their car to your Brewerton garage complaining of a knocking sound. While you focus on diagnosing and fixing that specific issue, you fail to notice that the brake line is severely worn and on the verge of failure. The customer leaves your garage satisfied with the repair, only to have their brake line snap shortly thereafter.

In this case, the customer could argue that you should have caught the brake line issue during your inspection, even though it wasn't the reason they brought the car to you. This is where E&O coverage would step in to protect your business from liability arising from the oversight.

The Limits of Other Coverages

It's important to note that other types of coverage, such as products completed operations coverage, typically won't protect your business in situations like the brake line example. That's because the issue wasn't caused by faulty workmanship or a defective part, but rather by a failure to identify a potential problem.

Without E&O coverage, your business could be left exposed to significant liability if a customer decides to take legal action over an error or omission on your part.

Consider E&O Coverage for Your Auto Repair Business

While E&O coverage may not be as well-known as other types of auto mechanic insurance, it can provide valuable protection for your business. By covering liability arising from faulty advice and failures to identify potential issues, E&O insurance can help you avoid costly legal battles and maintain your reputation as a trusted service provider.

When setting up your auto mechanic insurance policy, be sure to ask your agent or provider about E&O coverage and carefully consider whether it makes sense for your business. While it may not be necessary for every garage, it can provide an important safety net for businesses that regularly provide professional advice and assessments to their customers.

Tow Truck Considerations for Auto Service Garages

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Many auto service businesses own a tow truck to help bring in customers' disabled vehicles or transport vehicles that have been in an accident to their garage for repairs. However, the way you use your tow truck can have a significant impact on your ability to obtain affordable and robust insurance coverage for your business.

Towing for Customers vs. Towing for Hire

Towing for customers vs. towing for hire.If you use your tow truck solely to transport vehicles that will become customers' cars—either because they've broken down or been involved in an accident—you'll generally have an easier time securing broad, affordable coverage for your garage.

However, if you use your tow truck for “towing for hire”—that is, providing towing services to the general public for a fee—you may face significant challenges when it comes to obtaining liability coverage. 

Most insurance carriers that offer the types of coverage discussed earlier (such as E&O insurance) are hesitant to work with businesses that engage in towing for hire, as it introduces additional risks and complexities.

The Impact on Your Insurance Options

If you do decide to use your tow truck for towing for hire, you may find that your options for garage insurance are much more limited. Carriers that are willing to work with businesses that engage in this type of towing may charge significantly higher premiums or offer more restricted coverage options.

On the other hand, if you limit your tow truck usage to transporting customers' vehicles to your garage for repairs, you'll generally have access to a wider range of insurance options at more affordable rates.

Insuring Your Tow Truck

Regardless of how you use your tow truck, it's important to ensure that it has proper commercial auto coverage. This coverage is typically included as part of your garage keepers policy, but it's important to work with your insurance provider to make sure that your tow truck is properly insured and meets all necessary requirements.

Stick to Towing for Customers

To maximize your insurance options and avoid potential complications, it's generally best to use your tow truck solely for transporting customers' vehicles to your garage for repairs. By avoiding towing for hire, you'll have access to a wider range of affordable, extensive insurance options that can help protect your business from a variety of risks.

When setting up your auto mechanic insurance policy, be sure to discuss your tow truck usage with your agent or provider and carefully consider the potential impact on your coverage options. By making informed decisions about how you use your tow truck, you can help ensure that your business has the protection it needs to thrive.

Start Protecting Your Auto Service Garage with Coverage That Fits

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Safeguarding your auto service garage with the right insurance coverage is essential for your business's long-term success and stability. By securing the appropriate policies, you can protect your employees, customers, and assets from potential risks and liabilities.

Failing to prioritize adequate insurance coverage can leave your garage vulnerable to reputational harm in the event of an accident, injury, or lawsuit. Investing in the proper policies now can give you composure and security, allowing you to focus on providing exceptional service to your customers and growing your business.

At Horan, we understand the unique challenges auto service garages face, and we're committed to being your guide in the complex world of insurance. As an independent agency working with multiple carriers, we have the expertise and informed perspective to identify your specific risks and design a customized coverage plan that meets your garage's needs.

Our experienced team will work closely with you, offering personalized attention and tailored solutions that other agencies may not provide. We'll take the time to understand your business, answer your questions, and ensure that you have the right coverage in place to protect your livelihood.

With our extensive knowledge of the auto service industry and our commitment to delivering exceptional service, we're confident that we can help you navigate the insurance landscape with ease. 

Let us be your trusted advocate in safeguarding your business, so you can focus on what you do best—providing top-notch auto repair services to your customers.

Click the Get a Quote button below to start protecting your auto service garage with coverage that fits, and experience the difference that working with a knowledgeable, independent insurance agency can make.

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Daniel J. Middleton

Daniel is an accomplished content creator. He has been working in publishing for almost two decades. Horan Companies hired Daniel as its content manager in November 2022. The agency entrusted its messaging to him. Since then, Daniel has written insurance articles, service pages, PDF guides, and more. All in an effort to educate CNY readers. He's helping them understand the world of insurance so they can make informed decisions.