Auto Repair Shop Insurance Requirements

By the Repair Shop Insurance editorial team · Updated September 27, 2026

What the law typically requires

Workers’ compensation

Most states require employers to carry workers’ compensation. The details — how many employees trigger the requirement, how owners are treated, and how coverage is purchased — are set by each state.

Auto liability on vehicles you own

Vehicles registered to your business need at least your state’s minimum auto liability coverage. A commercial auto policy is the usual way to meet it.

State and local repair shop rules

Some states and localities require repair facilities to register or be licensed, and some of those programs include insurance or bond requirements. Because they vary and change, we don’t publish a state-by-state list; check with your state and local licensing authorities.

What contracts usually require

For many shops, the most specific insurance requirements are in documents they’ve already signed.

• Your lease. Landlords commonly require general liability at specified limits, being named as an additional insured, and property coverage on your improvements or parts of the building.
• Equipment financing. Lenders financing lifts, alignment machines, or diagnostic equipment usually require property coverage on that equipment with the lender listed as loss payee.
• Fleet and commercial customers. Businesses that send you their vehicles often require specific liability and garagekeepers limits, additional insured status, and a certificate of insurance before work begins.

Pull out those documents before you shop for coverage. Their written requirements are a floor, and matching them exactly avoids a scramble when someone asks for a certificate.

What most shops need even when nobody requires it

• Garage liability, including completed operations coverage for work that fails after the car leaves.
• Garagekeepers, if customers’ vehicles are ever in your care.
• Property and equipment coverage for what you own, and business income coverage to keep the business afloat after a covered loss.
• Auto liability that applies to driving customers’ vehicles and employees’ own cars on shop business.

How much coverage does an auto repair shop need?

Liability limits

Liability policies usually have a per-occurrence limit and an aggregate limit for the policy period. A common structure is $1 million per occurrence with a $2 million aggregate, but that is a convention, not a rule — your contracts may require more, and the right limit depends on the severity of what could go wrong. For a repair shop, that means thinking about a brake or steering failure at highway speed.

Garagekeepers limit

Base it on the highest total value of customer vehicles you ever have on site at once, including overnight. Our garagekeepers guide walks through the calculation.

Property limits

Use what it would cost to replace your equipment, tools, and parts today — not what you paid years ago. Too low a limit can reduce claim payments under a coinsurance condition. For business income, think about how many months it would realistically take to reopen after a serious fire.

Umbrella coverage

An umbrella policy adds liability limits above your underlying liability, auto, and employer’s liability coverage. Shops consider it when contracts require higher limits than the underlying policies provide, or when the potential severity of a claim exceeds those limits.

A note on business owner’s policies

A business owner’s policy (BOP) bundles property and general liability for small businesses. Many insurance companies restrict or exclude auto repair operations from their BOP programs, and where one is available, it doesn’t include garagekeepers or auto liability. Don’t assume a BOP alone meets a repair shop’s needs.

Certificates of insurance

A certificate of insurance summarizes your coverage and limits for someone who needs proof, such as a landlord or fleet customer. It doesn’t change your policy by itself; if a contract requires additional insured status or specific wording, the policy needs to provide it. Keep the requester’s written requirements on file and share them with your agency. Our guide to lease requirements and certificates of insurance walks through the common clauses and mistakes.