Engine Repair Shop Insurance
Owning or starting an Engine Repair Shop can be profitable, but don’t forget that your business can also be risky, so making sure you have the right Engine Repair Shop insurance whether it’s a full-time or part-time business is essential.
How to plan what insurance your Engine Repair Shop business needs.
There are many different kinds of Engine Repair shops, based on the sorts of machines that can fall under this category.
All businesses need to protect themselves with insurance against, but there are some special aspects to the engine repair shop activities that need extra attention.
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Insurance for any business falls into three broad categories:
Liability insurance – to cover future claims that your business activity caused some damage or injury to a third party (known as General Liability Insurance); that your work was either not properly done or failed to satisfy the promises you made when taking on the work (known variously as Professional Liability Insurance or Errors & Omissions Insurance), or some products you supplied were faulty, did not match the requirements, or caused some damage once delivered (Product Liability Insurance)
Commercial insurance – to cover the value of the business’ assets, including buildings you either own or lease, equipment, tools, vehicles and all other physical things that the business has invested money in.
Business insurance – to meet the requirements of owning and running a business, such as Workers Compensation Insurance, Business Income Insurance, Data Breach Insurance, Business Interruption Insurance, Cyber Liability Insurance, Directors and Officers Insurance.
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Types of Engine Repair Shop businesses
There are many different types of Engine Repair Shop businesses and they may need special types of insurance, or may require different levels of cover from other businesses.
In the table below, the main types of Engine Repair Shop businesses have been grouped into four main types, where the engines are being used in personal, industrial, transport or commercial applications.
Some of the more typical types of engines, and the likely special insurance needs in each of these are:
|Group||Typical type of engine||Special insurance needs|
|Personal / Portable||Two-stroke engines (handsaws, small generators, garden care equipment, camping equipment, lawn mowers, outboard motors, gas trimmers, leaf blowers, chainsaws)
Small electric motors
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|Industrial||Four cylinder engines (wood processors, air compressors, generators, construction equipment, air staplers)||General liability
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|Transport||Four-stroke engines (Sand shovels, Snow shovels/snow blowers, lawn tractors, snowmobiles)||General liability
|Commercial||Four cylinder four-stroke engines (wood processors, air compressors, generators, concrete mixers)||General liability
In this table, the insurance types highlighted in bold are especially important, and probably require higher levels of cover than would be recommended for a different kind of business than for your engine repair shop business.
Liability Insurance for engine repair businesses
General liability insurance for engine repair businesses covers your engine repair business for any claims made by a member of the public for damages that occur in the conduct of your repair activities.
It gives you cover for all of the costs of compensation for personal injuries and loss of or damage to a third party or to their property.
This kind of liability insurance provides you with coverage in the event of an accident where you are working, such as at a customer’s home, office or worksite, causing injury to someone other than you, or damage to their property.
It is often called “trips and falls” insurance. An example is if a person stumbles and falls while trying to get around you when you have dismantled the item to be repaired and have blocked a pathway.
Any injury to themselves or damage to their gear, such as if they drop a box containing antique bottles worth thousands of dollars, could give rise to a claim for compensation.
Take out enough general liability insurance to match the level of risk that you face.
If you are repairing small tools (in the table, in the Personal group), you should take out as much general liability insurance as you need to cover the maximum possible claim under your State and city law.
This is known as the Aggregate Liability limit.
Most insurance companies will suggest an aggregate limit of one million dollars with a single claim limit of one quarter or one half of the aggregate. Unless you think your business has special features that could increase your levels of risk, then in most cases the suggested aggregate should be enough.
You can customize your engine repair shop liability insurance by specifying an increase to the aggregate liability limit by an endorsement to the policy.
Professional liability Insurance (also called E&O insurance) for your engine repair shop covers you against claims from customers that you made some mistakes, errors or omissions when you were performing your engine repair services.
It is essential for any business performing such work because your customers trust and believe that you are performing the service correctly, professionally, and thoroughly with due care and diligence.
The customer may claim that you performed your services without the required care, diligence or skill level, or that the service was not what you were hired to do. If any case arises of such a claim, if you go to court, you will have to defend your work and reputation, and the cost of defense can be extremely high. Although you could win the case in court, you may have to pay for the whole defense yourself.
The levels of professional liability for engine repair shop cover depend very much on the value of the equipment that you are repairing.
For example in the Personal group, a claim involving a small two-stroke garden mower may involve just a few hundred dollars at most, whereas in the Industrial or Commercial groups a large four-cylinder four stroke concrete mixer could be worth tens of thousands of dollars.
Another thing to consider when deciding on your levels of professional liability insurance is whether your customers could claim that their own business activity was held up as a result of some error or omission on your part.
For example, in the commercial group, consider what could happen if you have been called in by a building contractor to repair a large generator, and for some reason the work could not be completed for some weeks because you could not get the right parts.
Even though this wasn’t directly your mistake, it could be claimed that the whole building site was shut down because the generator was not operating, and there could be a claim for damages and losses running into many thousands of dollars.
Product liability insurance for engine repair shops is needed when you are supplying parts or replacements to your customers as part of your engine repair shop business.
If a customer engages your services to repair a broken device, and you fit a new part, then your business is liable for any subsequent damages that can be attributed to that part.
If the customer claims that the part was not the correct one, or that it stopped functioning within a reasonable period, then your only protection is if you have product liability insurance.
Asset insurance for engine repair shops
Commercial property insurance
If your engine repair business is based in owned or leased premises, then they carry a very substantial risk of loss for you in case of damage from events like storms, floods, earthquakes or fires.
As well, acts like vandalism and sabotage should be covered.
As well as the value of the buildings and improvements, your Commercial insurance policies should also cover the contents, such as equipment and furniture, computers, etc.
In some cases, commercial insurance covers any inventory and stock.
If not you should also take out separate inventory insurance that covers the stock and goods held inside the buildings against theft and burglary, as well as the other same risks on the buildings.
When estimating the amount of cover that your engine repair business insurance should provide, take into account the risk of secondary damage that could come from flammable gasses and fuels, which can be quite high due to the nature of the equipment and tools you are repairing.
Commercial vehicle insurance
It is an essential part of the engine repair shop business operations to be moving material between sites, as well as collecting devices from customers or parts from suppliers.
This will require you to have proper Commercial vehicle insurance.
Your private auto is not insured if you use it for collections or deliveries, or for any business activity.
As well, commercial auto insurance cover gives you higher levels of protection than private cover in case of a major claim.
If your engine repair shop business is working in the major categories like Commercial, or Industrial, you should take out between $1 million to $2 million because the risks for engine repair business are generally higher.
You may also need equipment insurance. Most engine repair shops have to invest a lot of money in the special tools and appliances needed to meet customers’ advanced products.
When you are working on the customer’s site, most of the time, your equipment cannot be supervised 24/7 because it is left at the workplace.
You then need to protect the values against risk of damage, loss or theft.
For this, you need Equipment insurance.
It gives you the peace of mind that you can replace any missing equipment at once and get reimbursed through your engine repair shop equipment insurance quickly.
Business insurance for engine repair shops
Business Owners Policy
Business owners insurance (BOP) cover for engine repair shops is offered by some insurance companies.
A BOP policy combines general liability insurance, commercial property insurance and business-related insurance like directors liability, cyber liability and others.
You can also opt for business interruption cover.
It is generally cheaper than separate policies and provides increased coverage.
Worker compensation insurance
Workers compensation insurance is a legal requirement in most states.
If your engine repair business employs more than a specified number of full time, part-time, casual or sub-contract workers it is required to have this cover.
It covers your employees from any injuries or illnesses resulting from work-related events. Each state regulates the rates.
Costs of insurance for engine repair shops
Many other service providers do special work on the premises of customers.
We have based our estimates on the usual costs for insurance quotes to Handymen, Solar panel contractors, Roofing contractors, Fencing installers, Field Service Technicians, General Contractors, Plumbers, Painters, Electricians, Glaziers, Locksmith, Carpenters, Groundskeeping and Landscaping services and Concrete contractors.
We are providing very general guidelines to the levels of cover and the annual premiums you can expect to pay.
The following are the general levels of cover recommended for these kinds of businesses, with rough estimates of the range of expected costs for annual premiums:
|Insurance type||Basic level of cover||Expected range of annual premium|
|General Liability||Commercial/Industrial/Transport: $10 million full year, $2 million for a single claim||$1400 – $2200|
|Personal/Portable: $1 million full year, $250,000 for a single claim||$500 – $850|
|Professional Liability (Errors & Omissions)||Commercial/Industrial/Transport: $1 million full year
$250,000 single claim with $2000 deductible*
|$1800 – $2300|
|Personal/Portable: $250,000 full year, $50,000 for a single claim with $500 deductible*||$800 – $1250|
|Product liability insurance||Commercial/Industrial/Transport: $1 million for the full year, $250,000 single claim with $1000 deductible||$800 – $1000|
|Personal/Portable: $50,000 full year, $10,000 for a single claim with $500 deductible*||$400 – $600|
|Commercial auto insurance||Based on replacement cost||$1350 – $2300|
|Commercial property insurance||Calculated on insurable value (IV)||$0.35 – $0.50 per $100 IV|
|BOP insurance||$10 million general liability + calculated commercial property cover||$650 – $800 & $0.30 – $0.45 per $100 IV|
The deductible amount you agree to is a way to reduce your premiums.
It means you agree to pay this amount first, before the insurance company has to pay anything.
You can negotiate this with your insurance agent, broker or directly with the insurance company.
Does an Engine Repair Shop require professional certification
Depending on the state in which you are working, and the type of equipment you are repairing, you may have to have professional certification before any insurance company will cover you.
There are no federal laws governing this, so you should be asking your local state government.
For example, in New York, the requirements are specified here.
In other states, you should search on google for information specific to your state such as:
- Associate of Small Engine Technology in California
- Associate in Powersports and Small Engine Repair in Miami
- Technical Certificate in Small Engine Repair in Texas
- Small Engine Repair Certification in Illinois
- Certified 4-Stroke Engine Technician in Washington
What are the most popular courses in small engine repair?
Colleges and accreditation schools report that these are the most sought-after accreditation courses:
- Small engine equipment rebuilding and maintenance
- Small engine diagnosis and repair
- Small engine ignition, lubricating and cooling systems parts and processes
- Small engine electrical and fuel systems