How Much Does Auto Repair Shop Insurance Cost? (2023 Rates)

Thang Truong
Thang Truong
Updated on:

Running an auto repair shop exposes you, your company, and others to various dangers. But with auto repair shop insurance, you can gain protection against the majority of them. A potential lawsuit is the most serious risk you may face. If you are found responsible for damages, the costs can be very high, on top of getting a legal defense. 

This is why you need auto repair shop insurance to cover these costs. Knowing that your company and assets are safe in a disaster will give your customers confidence that you are a trustworthy company and will allow your employees to focus on their work. 

In this piece, we will discuss the cost of auto repair shop insurance so you can prepare yourself in the right way.  

  • How much does auto repair shop insurance cost?
  • General liability insurance cost for auto repair shops
  • Garage keepers insurance cost for auto repair shops
  • What factors influence the cost of auto repair shop insurance?
  • How to save money on auto repair shop insurance

How much does auto repair shop insurance cost?

The average cost for a $1 million limit insurance policy for auto repair shops is $75 per month, or $900 per year. And that is only for general liability insurance, or also known as garage liability insurance. Costs can rise with more extensive coverage. The cost of auto repair shop insurance for small businesses also varies depending on various factors, which we will discuss below. 

Below is the table breakdown of the average costs of different coverages that an auto repair shop might need:

Auto repair shop insurance coverage Average costs
General liability or garage liability insurance $75 per month
Garage keepers insurance $85 per month
Commercial property insurance $120 per month
Workers comp insurance $125 per month per employee

These are just the averages. You will have different rates. Be sure to shop around with a few companies or work with a top broker like CoveWallet, Simply Business, to get and compare several quotes in one place to find the cheapest one for your auto repair shop insurance policy.

Getting online quotes from the top providers when available. In our research, only three companies offer online quotes for auto repair shops: Progressive, biBERK, and THREE insurance. They are also very reputable. biBERK and THREE insurance are owned by Berkshire Hathaways. It should take from 5-10 minutes to get a quote from these companies. So it may be worth it to get these quotes online and compare them to find the cheapest one.

General liability insurance cost for auto repair shops

General liability insurance for auto repair shop is also known as general liability insurance, mechanic insurance, or simply garage insurance. A garage insurance policy will pay for third-party bodily injury or property damage in your auto shop.

Medical expenses for the injured party, court costs, legal fees, property replacement or repair, and settlement costs are all covered by garage insurance. These things can be costly and can financially ruin your auto repair shop if you do not have adequate coverage.

The average cost of garage liability insurance is $75 per month, or $900 per year for $1 million limit coverage policy. Learn more about this coverage at the best garage liability insurance companies.

Garage keepers insurance cost for auto repair shops

You should consider garage keepers Insurance if you keep a customer’s vehicle overnight or for an extended period. Garage keepers insurance protects you if your customer’s vehicle is stolen or damaged while in your care and control. This includes while it is parked in your lot or your shop.

Some might be confused between garage keepers insurance and garage liability. Learn more about the differences between these two coverage here.

The average cost of garage keepers insurance is $85 per month, or $1,020 per year. Learn more at garage keepers insurance cost and the best garage keepers insurance companies.

Commercial property insurance cost for auto repair shops

Commercial property insurance covers your garage, expensive machinery, inventor, and other valuable assets. Fire, natural disasters, vandalism, and theft are usually covered under this policy. Coverage for debris removal, pollutant cleanup, equipment breakdown, computer equipment, and boiler and machinery insurance should all be discussed with an insurance agent.

The average cost of commercial property insurance for auto repair shops is $120 per month, or $1,440 a year. Learn more at commercial property insurance cost and the best commercial property insurance companies.

Business interruption insurance cost for auto repair shops

Business Interruption Insurance, or  Business Income Insurance, assists in covering lost income, operating expenses, payroll costs, taxes, and debt repayment if your business property is damaged or rendered unfit for the use for an extended period.

The average cost of business interruption insurance for auto repairs shops is $45 per month, or $540 per year.

Business owners’ policy cost for auto repair shops

Every owner of an auto repair shop should consider a Business Owners Policy. A BOP typically combines general liability insurance, business property insurance, and business interruption insurance in one single policy. BOPs are typically offered at a reduced rate by insurance companies to small business owners (compared to purchasing each policy separately). It is also make it more convenient for small business owners to manage their business insurance coverages.

Small businesses pays an average of $128 per month for their BOP, or $1,450 a year. Learn more at the BOP insurance cost and the best BOP insurance companies.

Workers’ compensation insurance cost for auto repair shops

Workers’ compensation insurance is required for automotive repair shops that employ people. This is because workers’ compensation is required by law in almost every state. While specific standards vary by state, we recommend having workers’ compensation from the first employee hired.

Workers’ compensation insurance can help pay for lost wages, medical expenses, and ongoing medical care for an injured employee. The policy may also cover legal fees and settlements if an employee becomes ill, injured, or even dies due to a workplace accident.

The average cost of workers comp insurance for auto repair shops is $125 per month, or $1,500 per year per employee. Learn more at workers comp insurance cost and the best workers comp insurance companies.

Commercial auto insurance 

You or your staff must test drive the cars to ensure their good condition. In this situation, commercial auto insurance will cover your employees, your customers’ vehicles, and your company.

Business auto insurance plans cover employees who crash while picking up parts or equipment.

The average cost of commercial auto insurance for auto repair shops is $90 per month, or $1,080 per year. Learn more at commercial auto insurance cost and the best commercial auto insurance companies.

What factors influence the cost of auto repair shop insurance?

The cost of auto repair shop insurance is determined by some factors, including:

The size of your business

The size of your company refers to your annual revenue, the number of clients, and some other specific business numbers. Usually, businesses with high revenue and profits tend to have more value. Therefore, it would cost more to insure an auto repair shop with more value than one that does not have so much value.   

The auto service(s) you provide

The more auto services you provide, the more you will pay for your auto repair insurance. This is because more services mean that you may commit more mistakes. Therefore, you will likely add a few more dollars to your bills for every service.  

For instance, if you have a garage where cars you repair stay overnight, you might pay extra. Also, companies that offer towing services might need tow truck insurance at an extra cost.

The number of workers you hire

The number of workers you have is important when calculating insurance rates. The more workers you have, the more likely they might have issues with clients, and usually, that increases the cost of general liability insurance.  

Also, more workers mean a higher worker’s compensation insurance premium. This is because companies pay for worker’s comp per employee.  

How long have you been in business?

New auto repair shops are difficult to insure. The reason is that they tend to have many problems that border around their inexperience in the industry. So, to cover for these problems, insurers tend to increase their bills.  

The deductibles and coverage limits that you select

Your coverage limit refers to the amount your insurer pays out when a covered incident occurs. Your deductible usually has a direct impact on the price you pay. Auto repair companies that choose small coverage limits tend to pay less. 

On the other hand, the deductible is the amount you pay to cover an incident. Usually, you have to pay the fee before the insurer honors your claims. The higher your deductible, the lesser you pay for insurance.      

How to save money on auto repair shop insurance

Before deciding to buy auto repair shop insurance, keep the following in mind as they may help you reduce costs

Shop around for quotes

Policy premiums differ among the insurers. To find the best coverage, you will need at least three quotes. Getting 3 quotes online is highly recommended. The three companies offering quotes online for auto repair shops are Progressive, biBERK, and THREE insurance. It shouldn’t take more than 10 minutes to get a quote on their websites. It may be worth the efforts.

You can also work with a top broker like Simply Business, CoverWallet, or to get and compare several quotes.

Identify your risks

To identify potential risks, thoroughly analyze your shop, considering its size, the type of repairs and maintenance you provide, and the vehicles you service. After that, select the appropriate limits and include all applicable coverages.

Work with an independent agent

An experienced independent insurance agent may help you find providers with the best rates and the most experience in your industry.

What does auto repair shop insurance cover?

Your auto repair shop insurance coverage depends on your insurer and options. Most policies protect your shop from these issues:

Damage to someone else’s property

Your technician hits the gas pedal too hard, denting the gate to the next-door business. General liability insurance protects you financially if you are held liable for property damage.

Injuries to customers

A customer slips and falls on your freshly washed floor, injuring their back. If someone other than an employee is injured, general liability insurance can help cover medical expenses.

Vehicle damage at your shop

Your mechanic inadvertently drives a car under repairs it into a bollard. Garagekeepers’ coverage would cover repairs to the vehicle’s body caused by the bollard.

Professional blunders

A customer claims that their car’s brakes no longer work properly after you installed new brakes. Faulty work insurance would aid in your defense against the claim.

Personal property damage

After an electrical fire, all of your hydraulic lifts are destroyed. If your property (owned or leased) is damaged due to a covered event, such as a burst water pipe, fire, or vandalism, commercial property insurance can help with replacement or repair costs.

Auto repair shops insurance requirements 

Because of the risk of injury and property damage, auto mechanics are almost always required to have insurance. You may require insurance for the following:

  • To get your state’s auto mechanic business license.
  • To rent or buy a bay or shop. Some landlords and banks may require it since it protects your inventory, equipment, and even the building you lease or own.
  • Safeguard your customers’ vehicles. Garagekeepers’ insurance helps to cover vehicle body repairs.
  • Protect your company, protect yourself from professional blunders (actual or alleged).
  • Repair or replace your own or rented property. Safeguard your equipment, inventory, and the building you rent or own.

What is not covered by auto repair shop insurance?

While basic auto repair shop insurance covers most of your potential risks, certain scenarios are not covered by most policies. Here are some examples:

  • Endangering a customer’s vehicle while in your care
  • Employee thievery
  • Damage or injury sustained while operating work vehicles
  • Incorrect vehicle evaluation

You may protect yourself from these potential claims by adding additional coverage to your policy.

Best auto repair shop insurance companies

Many companies offer auto repair shop insurance and it can be confusing to find the best one for your business. We have done the research and here are our recommendations of the best auto repair shop insurance companies for your consideration.

Thang Truong

Thang Truong covers small business insurance and small business success at BravoPolicy. He is a licensed P&C insurance agent. Previously, he held product leadership positions at, Capital One, NerdWallet, and Mulberry Technology. He holds a MBA degree from UC Berkeley - Haas School of Business.

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