Washington Garage Liability Insurance

In addition to an auto dealer bond, Washington motor vehicles dealers are also required to purchase garage liability insurance. Learn more about this policy below, and request a quote from Absolute Surety today.

What Is It?

Garage liability insurance protects any business that repairs and services vehicles for customers from liability claims stemming from garage operations. Places where motor vehicles are serviced and repaired can be dangerous places for both people and vehicles. Injuries to employees are covered by the business’s Worker’s Compensation insurance, but injuries to customers are covered by general liability insurance. Damage to vehicles owned by the business is typically covered by a commercial auto insurance policy.

Garage liability insurance is essentially a hybrid that combines certain features of general liability and commercial auto insurance. It often includes garage keeper’s coverage, which gets its name from the fact that it provides protection for customers’ vehicles while they are in the garage’s custody, care, and control (i.e. “kept” by it). It is similar to general liability but covers customers and their vehicles, not employees or vehicles owned by employees or by the business.

Who Needs It?

Washington is a little unusual in that businesses are licensed by the Department of Revenue’s Business Licensing Services. A dealership license is issued by the Washington State Department of Licensing as an endorsement to the business license. It’s the Department of Licensing that requires applicants for a dealership license to obtain a $30,000 surety bond and provide evidence of garage liability insurance.

The term “garage” applies to dealerships that repair and service cars on the premises. Dealerships that have repair facilities on the premise are required by law to have a garage liability policy. Other businesses that work on vehicles and often have custody, care, and control of customers’ vehicles also benefit from this policy even if they’re not required by law to purchase it, for example:

• Specialty repair shops like muffler shops, tire shops, transmission shops, and body shops
• Towing services and impound lots
• Car washes and car detailing services
• Restaurants and hotels with valet parking services

Customers of such businesses can be injured through their own or an employee’s inattention, and their vehicles can be damaged by accident, fire, or extreme weather, stolen, or vandalized. Without garage liability insurance, one substantial claim can wipe out a small business’s profits for the year or even put it out of business.

How Does It Work?

Like all insurance policies, garage liability transfers risk from the policyholder to the insurance company in a way that a surety bond does not. A surety bond buys the bonded entity, or principal, some time to come up with the funds, but ultimately the legal responsibility for paying claims (or reimbursing the surety company for paying claims) belongs entirely to the principal. Insurance claims, however, are paid by the insurance company except for the per-claim deductible amount selected by the insured at the time the policy is purchased.

How Much Does It Cost?

The premium you will pay for garage liability insurance depends on a number of factors, including:

• The coverages included in the policy
• The policy limit (i.e., the maximum amount that will be paid on a single claim)
• The size of the deductible elected by the insured

In most cases, a garage liability policy will cost between a few hundred and a couple of thousand dollars per year.

Request A Quote

You can rely on Absolute Surety to get you the best deal possible on the insurance you need for your dealership or repair facility. Request a quote today!

Request A Quote