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Garage liability insurance is a hybrid policy that combines certain features of commercial auto and general liability insurance.
Commercial auto insurance doesn’t cover customers’ vehicles. This is why a garage liability policy is important. These policies provide coverage for customers’ vehicles while they are in the custody, care, and control of a dealership or other repair facility. The policy pays claims for bodily injury and property damage, whether they are the result of:
Employee negligence or error
Accidents that occur during test drives by employees
Vandalism or theft
In short, garage liability policies can save a business a great deal of money. With the right insurance, you can even be protected from being bankrupted by having to pay out steep court-ordered damages.
Who Needs It?
Louisiana requires used car dealers to have a minimum of $55,000 in garage liability coverage. Other businesses that often purchase these policies voluntarily include:
Full service repair shops
Specialty shops that provide a limited range of services (e.g., mufflers, tires, brakes, transmissions, and so on)
Quick lube shops
Towing services and impound lots
Car washes and detailers
Valet parking services
Any business that has temporary custody, care, and control of customers’ vehicles or that faces the risk of potential injury to customers in the course of its normal operations should give serious thought to purchasing garage liability insurance. Even if there are no claims against a policy, knowing that the business is insured can make it more attractive to customers.
How Does It Work?
Garage liability policies protect auto dealers against potentially high damages resulting from accidents that occur in the course of day-to-day garage operations. It is often bundled into a custom-tailored business owner policy (BOP), along with Worker’s Compensation and other coverages, such as business interruption insurance.
The main principal underlying garage liability insurance is the transfer of risk from the insured to the insurer. The insured makes regular premium payments, and in exchange, the insurance company pays any valid claims against the policy.
How Much Does It Cost?
The annual premium for a garage liability policy rarely exceeds $2,000 and can be as low as $300. The cost of any given policy depends on these key factors:
The specific coverages included (e.g., garage keeper’s coverage)
The deductible amount chosen at the time the policy is established
The policy limits (the most the policy will pay on a single claim)
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Contact us with any questions you may have about obtaining the surety bond and insurance you’ll need for your auto dealership or auto-related business.