If you intend to open a tire shop business, note that you will be required to buy insurance policies for the business. In the United States and most countries of the world, you cannot legally operate a business without having some mandatory insurance policy coverage.
Note that you cannot categorically state how much insurance policy coverage will cost a tire shop business without stating the type of insurance policy coverage you need for the business. If you own a tire shop business, then you will be exposed to cases like:
Property damage, customer injuries, product liability, theft, damage to customer vehicles during service, medical payments, legal defense and judgment, and personal and advertising injury among others. Proper insurance coverage can help protect the tire shop’s financial stability in case of unexpected events or claims.
Best Insurance Policy for Tire Shop Business
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General Liability Insurance
This insurance protects other staff members from suffering financial losses when your staff member causes an accident. Also, note that this insurance helps pay for injuries and damages to other people when your employee is at fault for an accident that happened in your facility. This business coverage comes in two specific pieces: bodily injury and property damage.
When there is an accident in your tire shop, the bodily injury portion of your liability insurance caters for the cost of medical care for the victims involved.
This coverage pays the medical bills and other expenses. It also pays for the expenses incurred for rehabilitation, physical therapy, and recuperation. When accidents cause fatalities, this coverage also pays for the victim’s funeral expenses.
Property Damage: If your organization is affected in an accident, the property damage portion of your liability insurance will cater to the cost of repairs.
On average, tire shops in the United States spend between $500 – $1,200 per year for $1 million in general liability coverage. Note that several factors will determine the price of your policy and some of them are;
- Your Location
- Your Deductible
- The Number of Your Employees
- Your Per-occurrence limit
- General aggregate limit
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Product Liability Insurance
This insurance coverage is important because as a tire shop, you are expected to sell and install used and new tires to customers.
Product liability insurance protects your business from product-related lawsuits. This insurance will cover medical, attorney, settlement, and judgment costs
The industry standard is a minimum of 1 million dollars in coverage but can be anywhere from $500,000 to $5,000,000.
According to HowMuch.Net, the cost of product liability insurance is typically $0.25 per $100 in revenue. So, a business that does $500,000 in sales a year may pay around $1,250 in annual premiums.
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Garagekeepers Liability Insurance
If you offer vehicle repair services in your tire shop, then you must endeavor to subscribe to Garagekeepers Liability Insurance.
This is important because Garagekeepers Liability Insurance will protect you from incurring costs if your customer’s vehicle is damaged under your care.
The average cost of Garagekeepers liability insurance can be as low as $25 per month, with the average cost being around $40 per month or $480 per year
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Workers Compensation Insurance
Even though general liability insurance protects your business from accidents, it usually doesn’t cover damages that you can avoid.
It simply means that a lot of workplace injuries are not covered. In a worst-case scenario, an employee could litigate for the injuries they incurred in the workplace, and that is where workers’ compensation insurance is most useful in a business.
Note that if an employee ends up with medical expenses from a workplace accident, workers’ compensation insurance can pay them for the time they are out of work, as well as their medical costs.
In return, the employee forgoes the right to sue the employer. Keep in mind that this is a mutually beneficial solution, and it is usually the easiest and quickest one as well.
Without workers’ compensation insurance in place, you might end up with a month-long legal battle that will drain the wallets of both the business and the defendant. Nationwide, the average cost of workers’ compensation insurance is $936 per employee, per year, or $78 per month.
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Medical Payments Insurance
It is important to note that this insurance protects all your staff members and clients who are in the tire shop at the time of any accident.
If anyone is injured, irrespective of who is at fault for the accident, medical payment coverage will cater to the associated medical bills.
You should speak with a licensed insurance agent to determine if it is a viable option for your tire shop business insurance needs.
The average national cost for health insurance is $456 for an individual and $1,152 for a family per month. However, costs vary among the wide selection of health plans.
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Physical Damage Insurance
This is the insurance coverage that protects your equipment directly. If your equipment is damaged or destroyed due to unexpected events and perils, this coverage will ultimately cater for the repairs and replacement of your equipment.
Comprehensive Physical Damage: This damage protects your equipment against a wide variety of potential day-to-day risks.
It also protects you against theft of your equipment; break-ins, vandalism, damages caused by natural events such as a hail storm, and more. This damage protection covers most damages that are not caused by overturning or by collision.
Specified Peril (CAC): This specified peril insurance provides you with protection against only those events and risks that are specifically listed on your equipment insurance policy. It is also known as CAC, which is short for Fire and Theft with Combined Additional Coverage.
In the U.S. most businesses pay an average of $1,771 per year for full coverage utility truck insurance, or about $148 per month, according to Bankrate’s 2022 analysis.
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Cyber Liability Insurance
Most businesses including tire shops leverage online resources to run their businesses. It is common for tire shops to collect customer’s information for follow-up or marketing via online platforms.
They also store such information online (cloud storage). This goes to show that a tire shop can be exposed to cyberattacks hence the need for cyber liability insurance which helps in protecting the tire shop from data breaches and cyberattacks.
The cost of cyber liability insurance depends on your policy limits and how much sensitive data your company handles. Small businesses pay an average premium of $145 per month, or about $1,740 annually, for cyber insurance.
Small business customers pay an average of $145 monthly for a cyber insurance policy, 38% pay less than $100 per month, and 33% pay between $100 and $200 per month.
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Commercial Umbrella Insurance
Commercial umbrella insurance provides an extra layer of liability protection by covering costs that go beyond your other liability coverage limits.
In other words, commercial umbrella insurance complements your other liability coverages by taking over when your other liability coverage limits have been reached.
Although commercial umbrella insurance is not mandatory for a tire shop business, it will not be out of place if you go the extra mile to purchase commercial umbrella insurance.
If you own a big tire shop business and you own several pieces of equipment, then you should make sure you buy commercial umbrella insurance for your tire shop business.
Commercial umbrella insurance costs about $40 per month for each $1 million of additional coverage. Your level of risk and how much coverage you buy determine the cost of this policy.
Note that many small businesses (17%) pay less than $500 per year for umbrella insurance and 36% pay between $500 and $1,000 per year.
Best Insurance Companies for Tire Shop
- Mutual of Omaha
- New York Life
- State Farm
- MassMutual
- Pacific Life
- OneAmerica
- 21st Century Insurance
- Acuity Insurance
- Allianz Life
- Allied Insurance
- Allstate
- American National Insurance Company
- Liberty Mutual
- Lincoln National Corporation
- Manhattan Life Insurance Company
- Nationwide Mutual Insurance Company
- New York Life Insurance Company
- MEGA Life and Health Insurance
- Gerber Life Insurance Company
- Globe Life and Accident Insurance Company
- GMAC Insurance
- Accident Fund Insurance Company of America
- American International Group (AIG)
- AmTrust Financial Services
- Zenith Insurance Group.