Auto repair shops play a crucial role in keeping our vehicles running smoothly and safely. From routine maintenance to complex engine repairs, these businesses offer a wide array of essential services. To protect themselves and their customers, auto repair shops require comprehensive insurance coverage. Understanding the General Liability (GL) code associated with these businesses is vital for both insurance providers and shop owners. This article delves into the GL codes for auto repair shops, the types of insurance they need, and key risk factors to consider.
Decoding GL Codes for Auto Repair Businesses
Insurance companies utilize classification systems to categorize businesses and determine appropriate premiums. These systems help assess risk and ensure accurate pricing for insurance coverage. For auto repair shops, several classification codes are relevant, depending on the specific system used:
Standard Industrial Classification (SIC) Codes:
The SIC system, though older, is still sometimes referenced. Relevant SIC codes for auto repair shops include:
- 7538: General Automotive Repair Shops: This is the most encompassing code for businesses offering a broad range of mechanical repairs.
- 7533: Automotive Exhaust Repair Shops: Specifically for shops specializing in exhaust system repairs.
- 7532: Body, Paint, and Upholstery Repair: While the original article notes auto repair shops normally don’t specialize in body work, this code is relevant if they do offer these services.
North American Industry Classification System (NAICS) Codes:
The NAICS is the current standard in North America for classifying businesses. It offers more detailed categories:
- 811111: General Automotive Repair: Similar to SIC 7538, covering a wide range of repairs.
- 811112: Automotive Exhaust System Repair: Mirrors SIC 7533.
- 811113: Automotive Transmission Repair: For shops specializing in transmission work.
- 811118: Other Automotive Mechanical and Electrical Repair and Maintenance: A broader category for various mechanical and electrical repairs not specifically listed elsewhere.
- 811121: Automotive Body, Paint, and Interior Repair and Maintenance: Corresponds to SIC 7532, for body shops and those offering paint and upholstery services.
- 811122: Automotive Glass Replacement Shops: For businesses focused on windshield and auto glass replacement.
- 811198: All Other Automotive Repair and Maintenance: A catch-all for repair services not classified in detail.
Business ISO General Liability Codes:
The Insurance Services Office (ISO) provides widely used codes for general liability insurance:
- 10073: Auto Sales, Repair and Service: A general code covering a combination of sales and repair services.
- 10075: Automotive Repair Shop—Self Service: For shops where customers perform their own repairs (less common but relevant in some contexts).
- 10072: Automotive—Quick Lube: Specifically for quick oil change and lubrication services, often a component of larger auto service businesses.
Workers Compensation Class Codes:
Workers’ compensation insurance has its own classification codes, focusing on workplace risks:
- 8380: Auto Repair: General code for auto repair work, reflecting the inherent risks to employees.
- 8393: Auto Body Repair or Paint Shop: Specifically for body and paint work, which involves different risks than mechanical repair.
- 9516: Auto Shop—Radio and Equipment: For shops specializing in installing or repairing car radios and other equipment, potentially involving different types of physical risks.
Essential Insurance Coverages for Auto Repair Shops
Beyond understanding GL codes, auto repair shop owners need to secure the right insurance policies to protect their business from various liabilities and risks. Here are key coverages recommended:
- General Liability Insurance: This is foundational coverage, protecting against common business risks like customer injuries on the premises (slips and falls in waiting areas or parking lots) and property damage. It also covers product liability, crucial for auto repair shops due to the risk of faulty repairs leading to accidents. Implementing check-off procedures to verify repair work is essential to mitigate this risk.
- Garage Keepers Liability: This specialized coverage is vital for auto repair shops. It protects customers’ vehicles while they are in the shop’s care, custody, or control. This includes damage from theft, vandalism, or accidents occurring on the shop’s property. Adequate security measures, like lighting and fencing, are important for risk management.
- Business Personal Property Insurance: Covers the shop’s own equipment, tools, inventory, and furniture in case of damage or loss from covered perils like fire, theft, or vandalism. Proper storage and labeling of flammable materials like oils and solvents are important for fire safety and insurance considerations.
- Hired and Non-Owned Auto Insurance: If employees use their personal vehicles for business tasks (like picking up parts), or if the shop rents vehicles, this coverage provides liability protection in case of accidents. Regularly checking driver licenses and vehicle registrations is crucial. For shops offering towing services, specialized tow truck insurance is necessary due to the higher risk associated with towing customers’ vehicles.
- Workers Compensation Insurance: Mandatory in most states, this covers medical expenses and lost wages for employees injured on the job. Auto repair shops have significant workers’ compensation risks due to lifting heavy parts, using machinery, and exposure to chemicals. Providing safety equipment and training is paramount to preventing injuries and managing workers’ compensation costs.
- Business Income with Extra Expense Insurance: Helps cover lost income and extra expenses incurred if the shop has to temporarily close due to a covered event, like a fire. This can be crucial for business continuity.
- Commercial Crime Coverage: Protects against financial losses from criminal acts like employee theft, forgery, and computer fraud. Implementing background checks and internal controls can help minimize these risks.
Other Important Coverages to Consider:
Depending on the specific services and operations of the auto repair shop, additional coverages may be beneficial:
- Forgery, Computer Fraud, and Funds Transfer Fraud Coverage
- Signs Coverage
- Employment Practices Liability Insurance (EPLI)
- Money and Securities Coverage
- Accounts Receivable Coverage
- Computers and Electronic Data Processing Equipment Coverage
- Goods In Transit Coverage
- Valuable Papers and Records Coverage
- Employee Benefits Liability Insurance
- Environmental Impairment Liability Insurance
- Commercial Umbrella Insurance (for extra liability protection)
Managing Risks in Auto Repair Shops for Better Insurance Rates
Insurance premiums are directly influenced by the perceived risk associated with a business. Auto repair shops can take proactive steps to mitigate risks and potentially lower their insurance costs:
- Premises Safety: Maintain a safe environment for customers and employees. This includes well-maintained floors, clearly marked steps, adequate lighting, and secure parking areas. Customer waiting areas should be separate from the service bays to prevent accidents.
- Vehicle Security: Implement measures to prevent theft and damage to customers’ vehicles, such as secure parking lots, fences, and alarm systems.
- Fire Prevention: Properly store and handle flammable materials. Ensure welding areas are safely separated with proper ventilation and fire-resistant barriers. Regularly inspect and maintain fire suppression systems.
- Employee Safety: Provide comprehensive safety training, necessary safety equipment, and enforce safe work practices to minimize workers’ compensation claims.
- Quality Control: Implement rigorous check-off procedures to ensure repairs are done correctly, reducing the risk of product liability claims.
- Employee Screening and Management: Conduct background checks on employees and implement internal controls to prevent employee dishonesty and theft.
By understanding the relevant GL codes and taking proactive steps to manage risks, auto repair shop owners can secure comprehensive and cost-effective insurance coverage, protecting their business and ensuring long-term success. For tailored advice and specific quotes, it is always recommended to consult with a commercial insurance specialist.
