A note before you start
This guide is general information, not insurance or legal advice. Policies, names and requirements differ by insurer and by state. Work with a licensed insurance agent who understands repair businesses, and read every policy.
What the law requires
According to the U.S. Small Business Administration, businesses with employees are required by law to carry workers' compensation, unemployment and disability insurance, and the requirements depend on the state. Some states and situations require more. If you operate vehicles, your state also requires auto liability coverage for them.
Beyond what the law requires, customers will often require coverage. Fleets and government agencies commonly ask for certificates of insurance with set limits before they let a vendor work on their trucks or their property. Ask each customer what they require before you sign an agreement.
Common coverage types
The SBA lists common types of business insurance, including general liability, product liability, professional liability, commercial property, home-based business insurance and a business owner's policy that bundles common coverages. For a repair business, an agent will usually discuss the following.
General liability
Covers claims that your business caused bodily injury or property damage to others, for example a customer who trips over a hose at your shop. It generally does not cover damage to the vehicles you work on, which is why repair businesses look at the coverages below.
Coverage for customer vehicles in your care
When a customer's truck is in your shop or under your control, damage to it may not be covered by general liability. Insurers offer coverage designed for vehicles in a repair business's care, custody or control, often called garagekeepers coverage. Ask how it applies when you work at the customer's yard rather than in your shop, and whether it covers vehicles you drive.
Coverage for your completed work
If a repair you made fails and causes damage or injury later, you may face a claim. Ask your agent how your policy handles claims arising from completed work and products you installed.
Commercial auto
Your service trucks need commercial auto coverage. Tell the insurer how each truck is used, what it carries, whether it has a crane, and who drives it. A personal auto policy may not cover business use.
Tools and equipment
Your tools, diagnostic equipment and parts stock are valuable and often travel on the truck. Ask about coverage for tools and equipment away from your premises, sometimes called inland marine coverage.
Commercial property
If you have a shop, commercial property coverage protects the building, if you own it, and your contents against events such as fire.
Workers' compensation
Required for employees in most cases, as the SBA notes. It covers medical costs and lost wages for work injuries. Repair work carries real injury risks, so this is essential.
Business owner's policy
A business owner's policy combines general liability and property coverage in one package for some small businesses. Ask whether your repair business qualifies and what it leaves out.
Other coverages to ask about
- Business interruption, for lost income after a covered event.
- Umbrella or excess liability, for limits above your primary policies.
- Pollution or environmental coverage, if you handle fluids and waste.
- Cyber coverage, if you store customer and payment data.
- Commercial crime, for theft by employees.
Questions to ask your agent
- Does my policy cover damage to customer vehicles in my care at my shop, at the customer's yard and on the roadside?
- What happens if a repair I made fails later and causes damage?
- Are my tools covered on the truck and on job sites?
- Does my auto policy cover the crane and equipment on my service truck?
- Who is covered to drive my vehicles?
- Am I covered if I move a customer's truck?
- What limits do my fleet customers require?
- What is excluded?
- How do I add a customer as an additional insured if they ask?
- What records will help if I need to make a claim?
Certificates of insurance
Fleets usually ask for a certificate of insurance before you start. Keep a current certificate ready, know how to get one quickly from your agent, and track renewal dates so a lapse does not stop work. Some fleets ask to be named as additional insured; your agent can tell you if and how that can be done.
Reducing risk lowers cost over time
Insurers look at claims history. Good practices that can reduce claims:
- Document vehicle condition with photos when you receive it.
- Record authorization before starting work, so there is no dispute about what was approved.
- Use checklists and record measurements, so you can show what you inspected.
- Train technicians on safe lifting, jacking, roadside safety and tire work.
- Maintain your service trucks and keep their records.
- Secure the shop and trucks against theft.
Good records protect you in disputes. A clear repair order with photos, measurements and the customer's approval is strong evidence of what you did and why. Some states require it: California's Bureau of Automotive Repair, for example, requires a written estimate and authorization before repairs and specific details on work orders and invoices.
Licensing and registration
Insurance and licensing often go together. The SBA notes that most businesses need a combination of federal and state licenses and permits, depending on activity and location. See mobile mechanic licensing by state overview.
When you add services
Tell your agent when you add services such as roadside response, towing, welding, DOT inspections, or work on new types of equipment. Coverage written for one kind of work may not cover another.
Reviewing your insurance each year
Review coverage at each renewal. Has your truck count changed? Your payroll? Your services? Your customers' requirements? Your claims? Updating the policy keeps you covered and helps the price reflect your real risk.
Handling a claim
If something goes wrong, act quickly. Make sure everyone is safe, record what happened with photos and notes, keep damaged parts, and notify your agent or insurer as your policy requires. Do not admit fault or promise payment before talking to your insurer. Give the insurer your repair order, approval records and inspection results. Complete, organized records make claims faster and fairer.
Insurance when you are starting out
New businesses often buy too little coverage to save money, or too much they do not need. Start with what the law requires, what your customers require and what would cause the most harm if uninsured, such as damage to a customer's truck or an injury. Add coverage as your business, payroll and fleet contracts grow, and review it with your agent.
Insurance and subcontractors
If you hire subcontractors, such as another mechanic for overflow work, ask for their certificates of insurance before they start, and ask your agent how your own policies treat their work.
Comparing quotes
Compare insurance quotes on coverage and exclusions, not just price. Two policies with the same premium can cover very different things. Ask each agent to explain the differences in plain language, in writing.
How MetaFleet helps
MetaFleet supports work orders with photos, digital inspections with recorded measurements, and estimates with customer approval, which give you clear records of vehicle condition and authorized work. Get a walkthrough.