What Does Garage Liability Insurance Actually Cover? Full Breakdown

Running a car dealership comes with many risks, from customer injuries to property damage. One of the most essential protections a dealership can carry is garage liability insurance. This specialized commercial coverage protects your business against claims that arise from daily operations — but many dealers aren’t fully aware of what it actually covers.

Here’s a detailed breakdown to help you understand garage liability insurance and ensure your dealership stays protected.

What Is Garage Liability Insurance?

Garage liability insurance is a commercial insurance policy designed to protect your dealership from:

• Bodily injury claims

• Property damage claims

• Personal or advertising injury

It’s often required by state regulators as part of your dealer license, ensuring your dealership can operate safely and legally.

What Garage Liability Insurance Covers

1. Bodily Injury Liability

If someone is injured on your property or during a dealership operation, garage liability insurance can help cover:

• Medical expenses

• Legal defense costs

• Settlements or judgments

Example: A customer slips in your showroom or is hurt during a test drive.

2. Property Damage Liability

Covers damage your business causes to another person’s property.

Example: An employee accidentally dents a customer’s car while moving inventory around the lot.

3. Personal & Advertising Injury

Protects against claims like:

• Libel or slander

• Copyright infringement

• Misleading advertising

This is especially important for dealerships running online or print marketing campaigns.

4. Test Drive Coverage

Garage liability also helps cover incidents during customer test drives, including bodily injury or property damage.

What Garage Liability Insurance Does NOT Cover

Many dealers mistakenly assume garage liability covers all dealership risks. It does not include:

• Physical damage to your inventory → Needs Garagekeepers Coverage or Dealer’s Open Lot (DOL)

• Damage to customer vehicles in your care → Needs Garagekeepers Coverage

• Employee injuries → Needs Workers’ Compensation

• Damage to buildings or equipment → Needs Commercial Property Insurance

• Theft or vandalism of inventory → Needs Dealer’s Open Lot (DOL)

Why Garage Liability Insurance Is Essential

Even a minor accident or claim can cost thousands. Garage liability insurance helps protect your dealership from:

• Customer injuries

• Vehicle damage during test drives

• Advertising-related claims

• Day-to-day operational risks

Having the right coverage ensures your dealership stays compliant, secure, and financially protected.

Get Your Garage Liability Insurance Fast

If you need garage liability insurance for your dealership,

specializes in helping dealers get the right coverage quickly and affordably. They also handle dealer bonds, licensing requirements, and other auto industry insurance needs.

👉 Get a fast quote today at QuickerBonds.com and protect your dealership the right way.