Intro:
Auto repair shops need business insurance for several reasons. In addition, they should obtain a few policies.
Professionals who fix vehicles face customers and have employees. Thus, the risk exists on both fronts. Plus, the owner must protect themselves too.
Vehicle repair shops faced scrutiny when the public found out that some employed sketchy business practices. It turned out that owners and their employees used aftermarket parts instead of new ones from the manufacturer.
In addition, the public found out that some mechanics encouraged unnecessary repairs and maintenance. Thus, an ingrained mistrust of mechanics exists.
Common Insurance Policies for Auto Repair Shops
The most common insurance policies for vehicle repair shops include:
- General liability
- Garage
- Commercial property
- Commercial vehicle
- Business Owner’s Policy
Moreover, owners must ensure that they obtain policies that the state mandates such as worker’s comp and disability.
Benefits of Obtaining Insurance
Income protection is the most important benefit that insurance provides. If a customer sues the shop for damages, insurance covers it. When the shop wins the suit, the policy covers the legal costs.
Keep in mind that those who decide to work as independent contractors, freelancers, and gig workers benefit from obtaining mechanic insurance too.
Owners must protect their income interests as well. For example, if they fall ill and can no longer operate the establishment, supplemental disability and life insurance help them stabilize their incomes.
Let’s look at five reasons why auto repair shops need business insurance.
1. Vehicle Fails to Run Properly
Diagnosing a vehicle is very different from diagnosing a patient’s medical condition. However, neither is a perfect science.
Once a car undergoes major repairs, they never return to the original manufacturer’s condition. That’s why they lose so much value. Overpromising puts the shop in a bad position. On the flip side, if they don’t give the customer assurance that the repairs will put the vehicle back on the road, they will lose the business.
Customers expect to receive what they pay for, especially if they pay for new parts. An unhappy customer can take a repair shop to court to recover their money.
2. Employee Error
Like doctors, vehicle repair employees can make mistakes. If an employee damages the inner workings of the car, the customer can file a suit against the shop.
Vehicle maintenance continues changing thanks to technology. Therefore, mechanics must keep up with the times. They must obtain proper knowledge of vehicle engines built after 2010.
Otherwise, mechanics might damage a technologically-advanced vehicle that costs thousands of dollars to fix or replace.
3. Workplace Injury
Most states require that employers pay for workers’ comp insurance. The insurance covers damages awarded to an employee who wins a suit against their employer.
Mechanics work with heavy and dangerous equipment. Veteran mechanics can handle it. However, distractions can lead to slips, falls, and injuries.
In addition, customers can hurt themselves on the premises too. If a court finds that negligence led to employee or customer on-site injuries, shops become liable for the damages.
4. Property Damage
Repair and vehicle body shops have restricted areas for many reasons. Once a mechanic begins their work, they move heavy and live equipment. Plus, some work requires putting the cars on lifts that raise them off the ground.
Most mechanics know that they need to practice caution while working. However, accidental property damage can occur anyway.
If the shop scratches, dents, or damages a vehicle in any way, it’s their responsibility to fix it.
When shops return cars to owners with damage that they don’t know they caused, customers have rights.
Thus, the shop must pay for the damages or fix it.
5. Income Protection
Business income insurance protects companies from the loss of income under certain circumstances. The expenses for lawsuits and damages quickly add up.
It already costs between $1,000 to $10,000 to operate a shop.
In addition, 2020 showed entrepreneurs that the economy can come to a standstill. Previously, natural disasters led to economic disruptions. Now, business owners must prepare for the unexpected too.
Shop owners benefit from obtaining supplemental disability, health, and dental insurance to keep themselves healthy. To protect the establishment, it’s also a good idea to obtain life insurance.
Conclusion
Insurance policy costs for an auto repair shop run between $100 to $300 monthly. Professionals in this field face several risks and insurance offers protection against them. Owners also face personal risks such as disability and illness. Thus, they should protect themselves too.
