Factors That Impact Insurance Cost for an Auto Body Shop

Nate Jones, CPCU, ARM, CLCS, AU
6 days ago
2 min read

Insurance is a vital expense for auto body shops, protecting your business, employees, and customer vehicles from accidents and claims. However, the cost of insurance can vary widely depending on multiple factors. Understanding what drives premiums allows you to make informed decisions and potentially save money.

This guide explores the primary factors that impact insurance cost for auto body shops and how Wexford Insurance can help you get a fast, tailored quote.

1. Business Size and Revenue

Number of Employees: More employees increase workers’ compensation and liability exposure.
Annual Revenue: Higher revenue often means higher coverage limits, which increases premiums.

Larger shops naturally face higher insurance costs because of greater risk exposure.

2. Type of Services Offered

The type of repair work your shop performs affects your insurance rates:

Collision Repair vs. Detailing: Collision work is higher risk due to handling damaged vehicles and heavy machinery.
Specialty Services: Painting, frame straightening, or custom modifications can increase liability exposure.

Insurance carriers price policies based on the services offered and the risks associated with them.

3. Coverage Limits and Deductibles

Higher Coverage Limits: Provide more protection but increase premiums.
Deductibles: Higher deductibles lower premiums but increase out-of-pocket costs if a claim occurs.

Choosing the right balance ensures adequate protection without overpaying.

4. Location and State Regulations

Insurance costs vary by state due to workers’ compensation laws, local claim frequency, and repair costs.
Urban shops may face higher premiums than rural shops because of increased liability exposure and theft risks.

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5. Claims History

Shops with a history of frequent claims are considered higher risk and may pay more.
Maintaining a clean claims record and practicing safety can help lower premiums.

6. Vehicle and Equipment Exposure

The number and type of company-owned vehicles affect commercial auto insurance rates.
Valuable shop equipment, lifts, paint booths, and specialized tools increase property insurance costs.

7. Safety Programs and Risk Management

Shops that implement safety measures (e.g., OSHA-compliant training, proper ventilation, and PPE) are viewed as lower risk.
Many insurers, including Wexford Insurance, offer discounts to shops with proactive risk management programs.