Junkyard Business Insurance
Getting insurance for your junkyard business is essential.
Junkyards need to be protected against things like property damage, product liability, and violations of environmental regulations.
For example, a customer’s car is scratched while one of your employees is attempting to take away some trash, or the trash on your lot causes environmental issues with your neighbor’s property.
We’ll help you find the most personalized and affordable coverage for your unique business.
Recommended: Next Insurance is dedicated to matching small businesses with the right policy at the best price.
Best Insurance for a Junkyard Business
General liability insurance is — generally speaking — one of the most important insurance policies for junkyard businesses.
Some of the risks general liability insurance covers are:
- Bodily injury
- Property damage
- Medical payments
- Legal defense and judgment
- Personal and advertising injury
Some of the following additional policies may also be beneficial for your junkyard business in addition to general liability:
- Commercial property insurance: Due to the large amounts of land needed to run a junkyard, a significant upfront investment is required. This policy protects this investment by safeguarding your business’s property from certain risks.
- Workers’ compensation insurance: This policy is required by state law if you employ workers, as it provides coverage for their lost wages and medical bills if they are injured during a work activity.
- Home-based business insurance: As many junkyard owners choose to live on their business property and commercial losses are not covered by a standard homeowner’s policy, this insurance is often necessary.
In order to find the optimal insurer to buy business coverage from, you must identify which type of provider best suits your situation:
- Traditional brick-and-mortar insurers
- Online insurers
While traditional insurers are typically more well-known, online insurers (e.g., Tivly and Next) tend to be the preferred choice as their digital approach allows them to offer similarly reliable insurance at a far cheaper cost.
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Cost of General Liability Insurance
On average, junkyards in America spend between $450 - $1,000 per year for $1 million in general liability coverage.
Compare the average cost of general liability insurance for a junkyard business to other professional industries using the graph below.
Several factors will determine the price of your policy. These include your:
- Location
- Deductible
- Number of employees
- Per-occurrence limit
- General aggregate limit
You may be able to acquire general liability insurance at a discounted rate by purchasing it as part of a business owner’s policy (BOP) rather than as a standalone policy.
A BOP is a more comprehensive solution that includes multiple forms of coverage, such as business interruption and property insurance.
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Common Situations That General Liability Insurance May Cover for a Junkyard Business
Example 1: While looking for a particular car part, a customer cuts his arm on a protruding engine part, requiring a trip to the hospital and potential surgery. Your general liability policy should cover his medical bills.
Example 2: Your marketing campaign includes a billboard and a new slogan. Another local business names you in a lawsuit and claims they have lost business because your slogan closely resembles theirs. General liability insurance should cover the cost of legal representation and damages, should they win the court case.
Example 3: You are hoping to expand the business by purchasing the land next door. As part of the loan agreement, the bank is requiring evidence of liability insurance. General liability insurance should fulfill that obligation.
Other Types of Coverage Junkyard Businesses Need
While general liability is the most important type of insurance to have, there are several other forms of coverage you should be aware of. Below are some of the most common types of coverage:
Commercial Property Insurance
Junkyards need a sizable amount of property to operate. Commercial property insurance will cover your business's real estate and property for perils like fire and weather.
This policy is generally included as part of a business owner’s policy (BOP). You can tailor this policy to your specific business insurance needs, whether you are a renter or building owner.
Workers Compensation Insurance
The state requires business owners to carry workers compensation insurance on all employees. If an employee injures themselves or falls ill doing work-related activities, the policy would cover their medical bills and a percentage of wages lost while out of work. It also protects the employer against lawsuits, offering legal representation if an employee sues.
Workers compensation is often purchased as a standalone policy.
Home-based Business Insurance
Many junkyard owners live on the property they run their business out of. Since homeowners insurance does not include business property and losses, it is important to purchase the proper coverage. Check with a homeowners insurance company to see if an extension of coverage for an additional premium is available. If not, you can purchase home-based business insurance as part of a business owners policy (BOP).
Commercial Umbrella Liability Insurance
Being a junkyard owner exposes you to a number of liability risks out of your control. While a general liability policy will protect you when a liability claim arises, fees associated with a lawsuit can add up. If you exhaust your underlying general liability limits, a commercial umbrella policy would take over. This policy helps with paying additional legal fees and court-awarded damages.
Additional Steps To Protect Your Business
Although it’s easy (and essential) to invest in business insurance, it shouldn’t be your only defense.
Here are several things you can do to better protect your junkyard business:
- Use legally robust contracts and other business documents. (We offer free templates for some of the most common legal forms.)
- Set up an LLC or corporation to protect your personal assets. (Visit our step-by-step guides to learn how to form an LLC or corporation in your state.)
- Stay up to date with business licensing.
- Maintain your corporate veil.
Junkyard Business Insurance FAQ
Yes, absolutely. You will need to first get a quote from an online business insurance provider like Next Insurance. Next allows you to then purchase a policy immediately and your coverage will be active within 48 hours.
A typical business owner’s policy includes general liability, business interruption, and commercial property insurance. However, BOPs are often customizable, so your agent may recommend adding professional liability, commercial auto, or other types of coverage to your package depending on your company’s needs.
"Business insurance" is a generic term used to describe many different types of coverage a business may need. General liability insurance, on the other hand, is a specific type of coverage that business owners need to protect their assets.
Due to the high potential for claims against your junkyard business, it is crucial to obtain business insurance prior to the start of its operations in order to maintain its financial security.
In a similar way, insurance will maintain the legal compliance of your junkyard business as it will likely be mandated by law to carry specific coverage (e.g., workers’ compensation and commercial auto insurance).
Not necessarily. Certain exceptions may be written directly into your junkyard business insurance policy, and some perils may be entirely uninsurable.
Yes, an LLC is meant to create a legal barrier between your business and your personal assets and credit. If you haven’t formed an LLC yet, use our Form an LLC guide to get started.
An LLC doesn’t protect your business assets from lawsuits and liability– that’s where business insurance comes in. Business insurance helps protect your business from liability and risk.