Car Dealership Garage Liability vs. Garage keepers: What’s the Difference?
- Nate Jones, CPCU, ARM, CLCS, AU
- 2 days ago
- 2 min read
If you operate a new or used car dealership, two of the most important insurance coverages you’ll encounter are Garage Liability and Garage keepers Insurance. Although they sound similar, they cover very different exposures. Many dealership owners misunderstand the difference, leading to costly coverage gaps during claims.
Here’s a clear breakdown to help you understand how both policies protect your dealership.
1. What Is Garage Liability Insurance?
Garage Liability is the foundational liability policy for car dealerships. It protects the dealership when your business operations cause bodily injury or property damage.
Garage Liability covers:
Accidents during test drives (when the dealership is liable)
Customer slip‑and‑fall injuries
Damage caused by your employees while operating the business
Liability claims tied to sales or service operations
This coverage functions similarly to general liability but is specifically designed for auto-related businesses. Dealership owners can learn more about liability basics through consumer education resources such as the Insurance Information Institute, which covers commercial liability concepts.
However, Garage Liability does NOT cover customer vehicles in your care, and that’s where Garage keepers steps in.
2. What Is Garage keepers Insurance?
Garage keepers provides protection for customer vehicles left in your care, custody, or control. Car dealerships need this coverage if they:
Service vehicles
Recondition or detail vehicles
Perform inspections or repairs
Store customer cars overnight
Garage keepers covers damage caused by:
Theft
Vandalism
Fire
Extreme weather
Employee negligence
Dealerships must also choose the correct coverage form:
Legal Liability – covers damage only if the dealership is at fault
Direct Primary – covers customer vehicles regardless of fault
Direct Excess – covers damage after the customer’s insurance responds
Choosing the wrong form can leave your dealership financially exposed.
3. Why Dealerships Need Both Coverages
A common misconception is that Garage Liability automatically covers customer vehicles, but it does not. Dealerships that skip Garage keepers often face uncovered losses after:
Storm damage
Lot theft
Technician mistakes
Fire in the service area
Carriers often require both policies for dealerships offering repair or reconditioning services.
Get the Right Liability and Garage keepers Coverage for Your Dealership
Not all insurance carriers understand the difference between these coverages or offer the right combination for dealerships. Pricing also varies depending on your inventory, services offered, location, and claims history. Wexford Insurance works with top-rated insurance companies that specialise in car dealerships, helping owners secure correct liability limits, Garage keepers forms, and deductibles tailored to their business operations.
👉 Request your car dealership business insurance quote from Wexford Insurance today and ensure your dealership, and every vehicle on your lot, is fully protected.
