Insurance is essential for detailing businesses. While detailing may seem as simple as cleaning cars, business owners must plan for potential risks.
Detailers handle other people’s property and are responsible for their own business and employees. That’s why it’s crucial to understand and secure the right insurance coverage.
Types of Auto Detailing Insurance
There’s insurance for almost every issue a detailing business could face. Below are the key types of insurance you should consider.
Garage Keeper’s Liability Insurance
This type of insurance will cover the vehicle while you are working on it and while it is in your possession. From the name, it might sound like it would only be geared towards fixed-location detailing shops to protect the vehicle overnight or while it is at the shop. This is also important for mobile detailers so that the vehicle is protected while the vehicle is being worked on. It protects against damage from theft, vandalism, fire, or collisions while vehicles are in your care.
It also protects against accidental damage that may occur to the vehicle while you are working on it such as a cracked windshield or a dent from someone dropping something on the vehicle, or burning through the paint while performing paint correction. Coverage should typically be based on the replacement cost of the most expensive vehicle that would be worked on if mobile, OR the total value of all vehicles in a detail shop at one time or if staying overnight to be covered for a full loss in the event of a fire or something similar.
Consider adding coverage that protects you while picking up and delivering vehicles for customers if your business will be offering those convenient services.
General Liability Insurance
General liability is designed to protect businesses against claims for incidents that may occur while operating. This could be someone tripping over a cord while you are working on their driveway or in a parking lot, or slipping and falling due to water on the ground in the showroom of your auto detail shop. In other words, general liability covers accidents that other policies don’t, such as a customer tripping over a cord at your shop. Essentially, a general liability policy will cover you in the event that a customer or 3rd party decides to sue you for some type of bodily injury, property damage or loss that you caused them to incur.
Theft Insurance
Detailing businesses often have expensive equipment and vehicles. Theft insurance protects you from financial losses due to stolen property.
Worker’s Compensation and/or Compensation Insurance
Worker’s comp covers wages and medical bills if an employee is injured on the job, in exchange for the employee not suing. Rates vary based on your business type. Make sure your business is categorized as “auto laundry” rather than “auto service” to get the right rate. This type of insurance will most likely be a requirement to operate your business, depending on where you are located.
Business Interruption Insurance
Business interruption or business income insurance covers loss of income due to damage to the facility or your mobile detail rig. If the insured location is closed due to fire, flood, or other disaster, insurance will cover lost income for a set number of days. This insurance will also be useful in the event that you are unable to operate your business due to government orders or the inability to acquire items necessary to operate.
Getting the Most Out of Insurance Coverage
The cost of insurance can seem deterring, but it can save you thousands when something goes wrong. With that said, there are ways to be smart about where you put that money.
How to Shop for Insurance
Since your business needs several types of coverage, consider an umbrella policy to cover multiple risks at a lower rate. Get quotes from different providers and ensure they’re accredited.
Insurance will typically start out in the $100-$200 for most detailers and go up from there depending on how much coverage you get and how many different types of coverage you select. If you have employees, this cost will be higher due to worker’s compensation.
What to Keep in Mind
When trying to keep premiums low, there are a few important things to keep in mind.
Filing a claim under any insurance will often raise the monthly cost. This means that for smaller incidents, it may be more cost-effective to pay for damages out of pocket rather than go to your insurance company and pay for increased rates moving forward.
Insurance costs should be in the back of your mind when hiring new employees as well. Potential hires with a poor driving record can drive costs up for auto detailing businesses if they get behind the driver’s seat.
Understanding insurance for detailing will save you money – and prevent future headaches.
Becoming a business owner can seem daunting at times, but we’re here to help demystify everything about auto detailing business ownership. If you want to learn from the best, check out our 3-Day Auto Detailing Craftsman Program.
We strongly recommend consulting with your legal counsel and seeking guidance from an insurance provider to determine the best insurance options for your business and your exact circumstances. While we’ve outlined various types of coverage to consider as a starting point, every situation is unique, and it’s important to get expert advice when dealing with something as critical as insurance!