Written by: Krystal Jackson, President of Barbee Jackson Insurance. Krystal is an industry expert with years of experience working with dealerships and repair shops across the United States. Her garage insurance department has been recognized as an industry leader.

Ins and Outs of Garage Liability Insurance

Garage Liability is a specialty insurance coverage designed for the automotive industry for operations that are dealerships and repair shops. Unlike a typical general liability policy, garage liability coverage is split to cover auto liability accidents as well as slip and falls. Barbee Jackson Insurance covers thousands of dealerships and repair shops with access to some of the insurance industries lowest prices. Call one of our specialists today (850) 389-2001 (Spanish speaking agents are available).

Garage Liability Insurance

If you own a dealership or repair business and are needing insurance, the type of policy you are looking for is a garage liability policy. Garage Liability Insurance covers:

✅Test drives - auto liability for accidents that occur while conducting a test drive
✅Accidents that occur at the business - Like a general liability policy, garage liability will cover such things like slip and falls

The coverage is split into two different protection levels - Auto and Other than Auto. Auto is liability coverage in the event that you get into an accident. It will cover for property damage and bodily injury liability.

Other than Auto is accidents that occur at the dealership or repair shop for slip and falls.

Both coverages (Auto and Other than Auto) have an aggregate, which is the most the insurance company will pay in a policy period.

⭐⭐⭐⭐⭐Maxwell Evans “Jennifer at Barbee Jackson Insurance absolutely got it done for us. We were up against a tight timeline and needed coverage dialed in fast, and she delivered without missing a beat. Super responsive, knowledgeable, and made the whole process way easier than it should’ve been. If you need someone who actually follows through and handles business, Jennifer is the one. Highly recommend.”

Dealership Insurance Requirements for Alabama

Every state has a different insurance requirement and governing body when it comes to dealerships. In Alabama this body is the Alabama Department of Revenue (ALDOR). The insurance requirements for dealerships are:

Liability - $75,000 in combined single limit (CSL) liability. The coverage is split into bodily injury and property damage. For example you carry the minimum level required of $75,000 and are involved in an at-fault accident where there is property damage and injuries. The insurance company will pay for both property damage and bodily injury up to the $75,000 coverage level. Higher limits are available up to $1 million.
Surety Bond - In the amount of $50,000
Failure to meet the minimum insurance limits set by the ALDOR will result in a civil penalty in the amount of $5,000.

If you own a Repair Shop or Collision Center the liability insurance is required, but not required to carry the Surety Bond.

How much does Garage Liability Cost?

Costs for a single person operation can run as low as $900 per year for the garage liability. If you are a dealership requiring the Surety Bond for $50,000 can be purchased for as little as $450 per year. 

Coverage Options

Dealer Open Lot (DOL) - Covers owned inventory by a dealership
Garagekeepers - Coverage for a customer's vehicle that you are in the care, custody and control. This coverage option is used for repair shops and related businesses, also for dealerships that also services vehicles
Furnished Auto - Coverage for both business and personal use of the dealership inventory
Commercial Auto - Coverage for owned vehicles used in the business
Workers Compensation - Medical and benefit payments for employees injured on the job
Business Interruption - Protects your business income in the event of a covered loss
Tools and Equipment - Inland Marine policy for scheduled and non-scheduled tools

Dealer Open Lot vs Garagekeepers

If you own a dealership and you want to protect your inventory against financial loss then you want to include Dealer Open Lot (DOL). DOL covers all inventory owned by the dealership up to policy limits. For example - you have four vehicles on lot with a value of $25,000 per vehicle. You would want to set your DOL at $100,000 because that is the full value of the lot. Coverage would be in the event of an accident, theft and weather related claims. Make sure that your agent verifies any exclusions on the DOL. Many insurance companies will exclude wind, hail and flood.

💡Krystal’s Pro Tip - Be Aware that DOL has a coinsurance clause that stated that you must cover all dealership inventory at that combined value must not go over the policy limit. For example your dealership has $100,000 in inventory for sale (what you paid for the vehicle, not what you are selling for), but you insured the lot for $50,000. The insurance company will only pay 50% of the loss, minus the deductible because you only insured the lot for 50%.

If you have a repair shop, collision center or a dealership that has a service business then you would want to add Garagekeepers Insurance. Garagekeepers is protection for customers' vehicles that are in the care, custody and control. For example - you are servicing a customers vehicle and damage it in the process. Garagekeepers would pay for the vehicle repair up to policy limits minus the deductible.

⭐⭐⭐⭐⭐James Rudy “Courtney and the team at Barbee Jackson Insurance have been extremely helpful throughout the process of getting coverage set up for my business. They’ve been very responsive, patient with questions, and great at explaining different options and helping guide decisions along the way. As a new business owner, having an insurance team that is knowledgeable, accessible, and easy to work with makes a huge difference. I highly recommend them to anyone looking for commercial insurance support.”

Questions and Answers

What is the most common garagekeepers claim?
The most common is a dent or scratch. We have seen more expensive claims such as a vehicle falling off the lift where the insurance company deemed it as a total loss paying $73,000 to replace the customer's vehicle.
How do I know what is excluded on the Dealer Open Lot?
You can ask your agent for a copy of the terms of the quote. This will outline all the exclusions. If you are working with an experienced agency like Barbee Jackson Insurance your specialist will point out any exclusions prior to you purchasing the policy.
One of my employees' vehicles broke down, can he borrow a vehicle from the inventory?
Not without having that employee listed as having a Furnished Auto. Dealership inventory is for business use only. That includes test drives, to and from auctions and other business related activities.
Many dealership owners will choose to have a Furnished Auto so they can drive the inventory for business and personal use.

We are ready to help you with your garage liability insurance - Call (850) 389-2001 or fill out the quote form to have an agent call you.