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How Much Does Auto Mechanic Shop Insurance Cost?


As an auto repair shop owner, you have probably been wondering how much insurance you need to protect your business from loss.

You’ve probably seen that many of your peers spend thousands of dollars each month insuring their auto mechanic shop, so it must be important to you, too.

But before you can set aside a budget for your auto mechanic insurance, it’s best to start off by understanding what it is.

What Is Auto Mechanic Insurance?

Running an auto repair shop is a risky business. Despite the demand for auto repair services, the business itself can be tricky to maneuver around. But business owners nowadays have realized the importance of getting auto mechanic insurance for their shops. 

Auto repair shop insurance is an umbrella policy that provides liability coverage and insurance requirements for businesses that repair vehicles. Your auto repair business can suffer from any unexpected accident, that can bring harm to your company. 

Auto repair shop insurance protects mechanic shops from all kinds of potential risks to the business. 

Auto mechanic insurance usually covers the following: 

  • Physical injury
  • Lost business profit and income 
  • Property damage
  • Equipment malfunction 
  • Missed wages
  • Third-party property damage 

The day-to-day operations of an auto repair shop can be dangerous and require business insurance. 

However, the next thing you need to understand is that there are many different types of business insurance that you can opt for. Sometimes, business owners have to opt for multiple types, to effectively safeguard their business. 

The Different Types of Business Insurance 

General Liability Insurance 

There are many things that can go wrong at auto repair shops. A customer can even sue your business if they slip at your premises. 

General liability insurance provides your business with coverage for risks arising from day-to-day, business operations. In addition to making your business safer, getting general liability insurance will save you from potential losses.

This insurance will cover all cases following under general liability including operations and autos. Basically, general liability protects you from cases that may arise for others because of your business.

General liability insurance will also protect you from third-party property damage and advertising mistakes. 

Commercial Property Insurance 

Commercial property insurance is of critical importance for an auto repair shop. It helps cover costs that may arise to replace any stolen business property, tools, and equipment.

It will also provide coverage in case you lose your garage to an accident or even a natural disaster. With commercial property insurance, you can easily recover the cost of replacing your stolen property or equipment. 

Getting commercial property insurance is usually one of the first steps an owner of a business in the automotive industry should take. 

Professional Liability Insurance

General liability and professional liability insurance are two of the most useful mechanic insurance policies for auto repair businesses. 

Under professional liability insurance, your company will receive coverage for any mistakes that are made during the provision of services. Mistakes are common in small businesses, especially garage operations.

And if a customer claims that your faulty work has caused them a financial loss, they can easily sue you. 

Property and Equipment Insurance 

Another important type of business insurance for auto repair shops in business insurance. It covers the costs that may arise due to damage or loss of your equipment during your business operations. 

It’s common for auto repair businesses to function with cost-intensive machinery and equipment. This also means that an auto repair shop could incur serious losses due to any damage. 

In such a case, property and equipment insurance comes in handy. However, you should check what your insurance is covering exactly before you purchase it. 

Garage Keeper’s Insurance 

Garage insurance, as the name suggests, provides cover for any accidents or losses that occur in your garage.

It’s important that you invest in garage insurance as it will protect you from any liability incurred because of your garage. For example, if a customer’s vehicle is parked there and is damaged, garage insurance is going to provide protection.

A customer’s car can also develop problems on its own while parked in your car. Garagekeepers’ insurance will cover the expenses of the repairs to the car. 

Without garage liability coverage, you will have to bear any damages that happen to the customer’s vehicle even if there’s no fault of your team. 

Workers Compensation Insurance

It’s common for employees to face accidents in the auto mechanic business. Even a small mistake can lead to grave accidents and consequences. 

In such a situation, workers’ compensation insurance is bound to be of benefit. With this type of mechanic shop insurance, you will not be liable to pay the expensive medical costs of your auto mechanics in case of bodily injury. 

Workers’ compensation is also mandatory in most states, depending on the number of people you are employing. It also covers the loss of wages along with bills. 

A worker’s compensation policy will protect your business against possible lawsuits from your employees. 

Cyber Liability Insurance

Automotive repair shops often store client information. From details on the customer’s car to payment records, an auto body shop is a data gold mine. 

Any data breaches can wreak havoc. Cyber Liability insurance will protect your auto repair shop from any legal issues that may arise from a loss or theft of data. 

The Benefits of Insurance For An Auto Repair Business

The question that many owners of auto repair shops often wonder is…is there even a need for auto repair shop insurance? Naturally, getting any type of mechanic insurance is a cost that needs to be incurred. 

Opting for insurance solutions for a small business can be even harder; you need to do a thorough cost-benefit analysis to justify the cost. 

Here’s why you should consider reaching out to an insurance company get a suitable mechanic insurance policy for your shop: 

  • Protects the auto repair shop from liability for any harm to others that may occur while repairing cars
  • Protects from lost income 
  • Protects against financial losses if the customer chooses to sue them due to an accident or faulty work.
  • Protects your shop from financial loss if an employee or other person at the garage sustains an injury.
  • Helps your business comply with certain regulations and operate legally 

Auto insurance for auto mechanics offers the same coverage as insurance for other businesses such as dentists, doctors, and lawyers. So in the long run, it helps you save money by minimizing your business risks.

Even if you’re running a mobile repair business, you will need to get yourself an insurance policy. Mobile mechanics typically don’t have any business property but even then, are at risk of physical injuries or causing property damage during their work.

However, the requirements for auto insurance are generally more stringent than other types of insurance because the risk of injuries is higher. 

The Cost of Getting Auto Repair Shop Insurance 

Now comes the part that you all have been waiting for….how much budget should you have in mind before you can book yourself a slot with an insurance company? 

The range of the cost of an insurance policy is between tens of thousands to even a million. The amount that your insurance agency is going to cost you depends on a number of factors:


Different locations or states may have different regulations regarding the policies required. You should seek expert advice on the policies required for business owners in your area. 

This is especially true for workers comp, as the state regulates the coverage levels. 


The size of your company is going to affect your insurance cost as well. The more people that work for you, the more money they make, and that means the more money you need to spend on your business insurance.

One of the reasons is that more employees mean a greater chance of an employee getting injured, falling ill, and getting injured.

Businesses can expect to pay more for business insurance if they have a larger number of employees.

And businesses with no employees may be exempt from state workers’ compensation mandates.

Payroll and Sales of Auto Repair Shops 

Workers’ comp insurance rates are proportional to the size of your payroll. On average, insurance costs are 70 cents to $2.25 per month per $100 of payroll, according to a 2020 report from the National Academy of Social Insurance. 

Insurers use revenue as a measurement for risk, and risk assessments will vary based on the number of claims being made.

Wrapping it Up 

The bottom line? The final cost of your insurance is going to vary with different factors. Every business faces unique risks, so the cost of insurance will also depend on your business needs. 

But most auto mechanics’ insurance policies are pretty standard. Depending on your state’s regulations, you’ll pay between several hundred dollars per month. 

They include collision damage coverage, comprehensive insurance, personal liability insurance, garage insurance, and even tow vehicle coverage. All of these come together to protect you and your business if an accident occurs.

But first, you’ll need to choose an auto mechanic insurance company. Again, you should ask friends and family for suggestions. You can also check online or talk to your local insurance agent. 

Be sure to find the best deal available. You don’t want to spend a lot of money on your insurance. Once you get a policy, it is important to keep it updated!

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