A repair shop has two risks most businesses don’t: other people’s cars sitting in your bays, and work that can fail after the car drives away. General liability handles injuries and damage from your premises and operations, but it excludes autos, so shops add an endorsement for customers’ cars on or next to the premises and garagekeepers coverage for damage to the cars themselves. Then come workers’ comp if you have employees (the rules vary by state), property and tools coverage, business auto for your own vehicles, and pollution coverage for oil and solvents. Read the exclusions closely: the standard garagekeepers endorsement doesn’t pay for faulty work or defective parts.
Liability for the shop and the work
The base layer is liability for bodily injury and property damage your business causes to others: a customer trips in the waiting room, or a part you installed fails down the road. Since ISO withdrew its Garage Coverage Form (CA 00 05) in 2013, auto service businesses have generally been covered by a commercial general liability form plus a business auto form (CA 00 01), with endorsements for garage exposures. Auto dealers go on a separate ISO form, the Auto Dealers Coverage Form (CA 00 25).
The general liability policy excludes autos. For classifications that include auto repair and service stations, gas stations, car washes, tire dealers and quick lube shops, ISO’s Commercial Lines Manual requires an endorsement called Operation of Customers Autos on Particular Premises (CG 22 68). It extends coverage to your liability for customers’ autos on or next to your premises while they’re with you for service. Two limits to notice: it’s tied to your premises, and damage to the customer’s car itself stays excluded as property in your care, custody or control. How general liability works and what garage liability covers.
Garagekeepers for customers’ cars
Damage to the customer’s car is usually handled by garagekeepers coverage. Under ISO’s Garagekeepers Coverage endorsement (CA 99 37), the insurer pays what you legally must pay for loss to a customer’s auto left in your care while you’re servicing, repairing, parking or storing it. Limits are scheduled by location, for comprehensive or specified causes of loss (fire, lightning, explosion, theft, mischief or vandalism) and for collision.
The basis you pick matters:
- Legal liability is the base coverage. It responds only when you are legally liable for the loss.
- Direct excess keeps the legal liability coverage and also pays regardless of fault, in excess of other collectible insurance such as the owner’s own auto policy.
- Direct primary pays regardless of fault, as primary insurance.
The endorsement excludes faulty work you performed, defective parts or materials, responsibility you take on by agreement, and theft by you, your employees or your shareholders. More on garagekeepers.
Workers’ comp
Requirements vary by state. California requires employers to carry workers’ compensation even if they have only one employee. Texas is the well-known exception: most private employers there can choose not to carry it, but those nonsubscribers have to report to the state that they don’t have coverage and report certain injuries. Underwriters will ask about payroll by job, the work your techs do, and who drives for the shop.
Building, tools and equipment
Commercial property coverage is designed for the building if you own it, your improvements if you lease, and the lifts, diagnostic equipment, parts and tools inside. Ask how employee-owned tools are handled, since many techs bring their own boxes.
Some shops can package property and liability on an ISO businessowners policy: a multistate ISO filing added classes for major and minor repair shops, body shops, quick lubes and tire dealers, within size and sales limits, and insurers may use their own eligibility guidelines. The Big “I” points out that the customer-car coverage in that program is narrower than garagekeepers, so compare before you switch.
Shop vehicles and road tests
A business auto policy is designed for vehicles the shop owns, leases or hires: a parts runner, a customer shuttle, a service truck. If employees run errands in their own cars, ask about hired and non-owned auto coverage. Road tests deserve their own question, because the general liability endorsement for customers’ cars only reaches autos on or next to your premises. When I quote a shop, I ask which policy responds when a tech takes a customer’s car down the street. Commercial auto basics.
Pollution, data and state rules
Used oil, antifreeze, solvents and fuel are part of the job, and liability forms can exclude pollution. ISO’s former Garage Coverage Form, for example, excluded releases at or from any premises an insured owned, occupied, rented or borrowed. EPA names car repair shops and quick lube shops among common used oil generators, and used oil management is governed by 40 CFR Part 279. Generators label containers and tanks “Used Oil,” keep them in good condition, contain spills, and ship used oil only with transporters that have EPA ID numbers. A pollution liability policy is designed for cleanup costs and third-party claims that standard forms may exclude.
If you keep customer names, addresses, vehicle records or card data in shop software, a cyber policy is designed for breach response and related claims. Insurance mandates for the shop itself vary by state. In California, for example, the items the Bureau of Automotive Repair lists for an automotive repair dealer registration application in 16 CCR 3351 don’t include proof of insurance, though workers’ comp still applies once you have an employee.
Common questions
Is garage liability the same as garagekeepers?
No. Garage liability is about injuries and damage your operations cause to other people. Garagekeepers is about damage to customers’ cars while they’re in your care.
Does garagekeepers pay for a bad repair?
Not on ISO’s standard endorsement. It excludes faulty work you performed and defective parts or materials.
Why buy direct excess or direct primary garagekeepers?
Legal liability garagekeepers responds only when you are legally liable. Direct excess also applies regardless of fault, in excess of other collectible insurance such as the owner’s, and direct primary applies regardless of fault as primary insurance.
Does a repair shop have to carry workers’ comp?
It depends on the state. California requires it even with one employee; Texas lets most private employers opt out, but they must report to the state that they don’t carry it.
Can a repair shop use a businessowners policy?
Some can. ISO added businessowners classes for repair shops, body shops, quick lubes and tire dealers, but customer-car coverage there is narrower than garagekeepers and insurers may use their own eligibility guidelines.
Sources
- IRMI: garagekeepers coverage (CA 99 37 for non-dealer auto businesses)
- IRMI (Craig Stanovich, Sept. 1, 2022): the auto exclusion in the CGL policy (CG 22 68 required for auto repair and related classifications)
- ISO Garagekeepers Coverage endorsement CA 99 37 10 01 (specimen hosted by the Big “I”)
- ISO Garage Coverage Form CA 00 05 07 97 (© ISO 1996; specimen hosted by the Big “I”)
- Big “I” Virtual University (May 9, 2025): ISO expands businessowners classes covering garage operations
- California Division of Workers’ Compensation: employer information
- Texas Department of Insurance: workers’ compensation for employers
- EPA: managing used oil, answers to frequent questions for businesses
- 16 CCR 3351, registration of automotive repair dealers (current text via Cornell LII)
General information about insurance for auto repair and service shops as of October 2026, not legal or tax advice; the policy forms and endorsements issued and each state’s laws control. Coverage depends on underwriting and the terms, conditions and exclusions of the policy actually issued.