Garage Liability Insurance FAQ

Garage liability insurance is one of the most important coverages for auto dealerships, yet many dealers are unclear on what it actually covers and why it’s required. This FAQ answers the most common questions dealers ask so you can stay compliant, protected, and properly insured.

What Is Garage Liability Insurance?

Garage liability insurance is a commercial insurance policy designed specifically for auto dealers. It covers bodily injury and property damage caused by dealership operations, including accidents involving customers, visitors, or dealership employees.

Why Do Auto Dealers Need Garage Liability Insurance?

Most states require garage liability insurance as part of the dealer licensing process. Even when not legally mandated, it is essential for protecting your dealership from lawsuits, medical claims, and property damage related to daily operations.

What Does Garage Liability Insurance Cover?

Garage liability insurance typically covers:

• Bodily injury to customers or third parties

• Property damage caused by dealership operations

• Legal defense costs related to covered claims

• Accidents occurring on the dealer lot or premises

Coverage applies whether the claim happens in the office, on the lot, or during dealership-related activities.

What Is NOT Covered by Garage Liability Insurance?

Garage liability insurance does not cover:

• Damage to vehicles held for sale

• Employee injuries (workers’ compensation covers this)

• Theft, fire, or vandalism of inventory

• Dealer bond claims

Additional coverages may be needed depending on your dealership’s operations.

Is Garage Liability Insurance the Same as Commercial Auto Insurance?

No. Garage liability insurance covers dealership operations, while commercial auto insurance covers specific titled vehicles owned by the business. Many dealers need both policies.

How Much Does Garage Liability Insurance Cost?

Costs vary based on:

• Dealer location

• Size of the dealership

• Claims history

• Coverage limits

• Type of inventory sold

Working with a dealer-focused agency helps ensure competitive pricing without coverage gaps.

Does Garage Liability Insurance Need to Be Renewed?

Yes. Garage liability insurance must remain active at all times. A lapse in coverage can result in license suspension, fines, or forced closure until coverage is restored.

All American Bonds and Insurance specializes in garage liability insurance for auto dealers nationwide. They work with multiple carriers to help dealers secure compliant coverage at competitive rates and ensure smooth renewals through QuickerBonds.com.