What Type of Insurance Do Car Detailers Need?
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Auto dealers need insurance because their services revolve around something their customers paid a lot of money for: their cars. Many auto detailing insurance packages include coverage for liability such as if an employee damages a car or if a customer or employee accidentally slips on wet floor. The auto detailer’s facility, tools and equipment are also protected with the right coverage.
Learn what additional insurances are available for your company and the cost of business insurance for auto detailing.
What Is Auto Detailing Insurance?
Auto detailing insurance is a type of business insurance that provides coverage for the unique risks that auto detailers and car wash businesses face in their daily operations. While policies can vary, they will typically cover the auto detailer’s liability expenses, as well as damages to or theft of their tools, equipment and other business property. If you operate a mobile detailing business, you will also want commercial auto insurance to ensure you’re covered while you’re on the road.
What Does It Cover?
What auto detail insurance and car wash business insurance cover will depend on the type of insurance you include in your policy. Below is an overview of the risks you can expect to be covered depending on your plan.
- Medical expenses if a customer is injured while at your business
- Repairs if you accidentally damage the customer’s car while detailing it
- Damages to other property the customer owns
- Employee workplace injuries and illnesses
- Libel or slander of another person or business
- Relocation costs if your business has to temporarily close as a result of a covered loss
- Motor vehicle accidents (if you operate a mobile detailing business)
- Legal fees if any of the above claims escalates into a lawsuit
Why Do Auto Detailing Businesses Need Insurance?
There are two reasons why an auto detailing business needs insurance: to meet legal requirements and for peace of mind. Regarding the legal side, commercial auto insurance is necessary if you operate a mobile detailing business as most states require drivers to be insured before they can hit the road. Meanwhile, workers' compensation is a must in most states if you employ workers.
Without insurance, you could be out thousands of dollars if a customer sues you for messing up their paint job and the judge rules in their favor. A car scratch alone can cost up to $3,500 to repair.
Similarly, you would be responsible for replacing all of your detailing tools and equipment if they were stolen or were lost in a fire.
What Types of Insurance Do Auto Detailing Businesses Need?
We've provided you with a list of basic coverages that should be included in your auto detailing business insurance policy to give you and your company well-rounded protection.
Commercial Auto Insurance
Commercial auto insurance is required in most states, providing coverage for accidents and break-ins. It’s ideal insurance for mobile auto detailers traveling from one client to another. Remember that your personal auto insurance will not apply to any business vehicles.
General Liability Insurance
General liability insurance covers the costs of medical bills, property repairs or replacements and legal expenses related to claims filed against you or your business for incidents involving bodily harm, property damage or personal injury. An example would be if a client trips over a floor jack while navigating through your garage and hurts their wrist. Your general liability coverage would help cover the client's medical expenses. Payouts for this type of claim average $30,000.
Workers' Compensation Insurance
Workers' compensation helps pay for medical expenses and an employee's lost income due to a work-related illness or injury. If you own a car detailing business and have employees, that your state will most likely require you to maintain workers’ compensation insurance.
Workers' compensation policies usually also come with employer liability insurance, protecting businesses from financial losses if an employee sues them for discrimination or wrongful termination.
Professional Liability Insurance
Professional liability insurance steps in if you or one of your employees makes an error while detailing a customer’s car. Car detailers should understand what tools, products and techniques are required to deliver a good service but mistakes can happen, which may result in cosmetic defects like scratches and blemishes on the car. If you have professional liability insurance, you'll be covered if a client claims you scratched their vehicle during the detailing process and you have to foot the bill.
Garage Keepers Liability Insurance
Garage keepers liability insurance coverage will provide financial compensation towards repairing or replacing customers’ vehicles damaged by fire, vandalism, collision or severe weather event while in your care. Depending on how comprehensive the job is, auto detailing can take anywhere from two hours to two days. Your shop will be liable if anything happens to a client’s vehicle during this time.
Commercial Property Insurance
Commercial property insurance will repair or replace your business property if it is stolen, burned down in a fire, vandalized or lost due to some other covered peril. While a smaller car detailing business may have low overhead costs, the cost of tools, air compressors, vacuum cleaners, degreasers, pressure washers and more can add up. Having commercial property coverage ensures you can replace these items if they are lost.
Keep in mind that coverage should extend to your signage and the building’s structure if you own or lease a space for your car detailing business. Fires are particularly nasty, with fire claims averaging $35,000.
Business Interruption Insurance
Business interruption insurance can provide lost income and financial coverage if you have to temporarily relocate your business due to a covered loss. Let's say a fire broke loose at your shop, spread to several combustible chemicals and completely destroyed your garage. The cost of picking up and moving your operation would be covered.
Additional Auto Detailing Insurance Policies To Consider
Here are some additional forms of auto detailing business insurance that can further protect your business.
- Business owners policy (BOP): Rolls general liability, commercial property and business interruption into a single plan at a lower rate.
- Cyber insurance: Provides for forensic investigations, litigation fees and system improvements if a phishing scheme or data breach compromises your client's online data.
- Commercial umbrella liability insurance: Extends your liability coverage past its initial limits once the original amount is exhausted.
How Much Does Auto Detailing Insurance Cost?
What you pay for car detailing business insurance will depend on your claims history, how many employees you have, if there are any work vehicles and your location. The cost of coverage will also depend on the type of coverage you choose.
For example, a general liability insurance policy can cost between $365 to $1,700 per year. If you add a commercial auto plan to your policy, you could pay another $750 to $2,500 annually.
How To Get Insurance for Your Auto Detailing Business
Here are some simple steps you can follow to get auto detail business insurance.
- Assess the specific insurance needs of your auto detailing business. This may include coverage for general liability insurance, property damage insurance, equipment and tools insurance, business interruption insurance and workers' compensation insurance.
- Look for insurance companies that specialize in providing coverage for auto-related businesses. Consult with other auto detailing business owners, industry associations or professional networks for recommendations.
- Obtain multiple quotes based on the coverage requirements you identified earlier. SmartFinancial can do just that in minutes. Just provide accurate information about your business operations, number of employees, annual revenue, location and any additional risk factors.
- Review the coverage offered by each insurance provider. Look at limits, deductibles, exclusions and policy terms. Consider the cost of premiums but also the value provided by the coverage. A slightly higher premium may be worth it if the coverage is more comprehensive.
- Consult with an insurance agent or broker who specializes in commercial insurance. They can provide expert advice and help you navigate the complexities of insurance policies.
- Read and understand all the terms and conditions. If you're unclear about anything, ask the insurance provider for clarification.
- Sign the paperwork and pay the premium. Make sure you obtain a copy of the policy for your records.
- Review your insurance coverage annually to ensure it still adequately protects your business. Inform your insurance provider of any significant changes to your operations, such as new services, expanded premises or additional employees.