About General Liability Insurance

All businesses, regardless of industry, face risks that should be covered by insurance. The most common and comprehensive type of policy business owners invest in is general liability insurance (or CGL).

Some of the risks CGL insurance covers are:

  • Bodily injury
  • Property damage
  • Medical payments
  • Legal defense and judgment
  • Personal and advertising injury

While businesses aren’t legally required to carry general liability insurance, operating without it is extremely risky. If your business is sued, you could end up facing fees totaling hundreds of thousands of dollars (or more). Having a sufficient CGL policy in place to help compensate for these damages is the only way to prevent this type of event from devastating your business.


Learn more about the risks covered by general liability insurance.

Example 1: While changing a customer’s oil, your employee fails to fully tighten the oil plug and it falls out after the customer drives away. The oil drains out, and the engine seizes, requiring a full replacement engine. Your general liability insurance policy would cover the repair costs for the customer’s property.

Example 2: A customer is walking through the door of the garage to the visitor’s area when he slips on some lubricant and falls, sustaining injuries that require immediate medical care. With a general liability insurance policy, you have coverage that will pay for the costs of his medical care.

Example 3: A competitor sues your company, claiming that you disparaged his business in your latest marketing campaign and damaged his reputation. Your general liability insurance will pay your legal defense when accused of libel as well as the cost of settling out of court if it is determined that doing so is the best course of action.

Of course, this is not an exhaustive list of perils a general liability insurance policy will cover, and some conditions may result in a particular peril not being covered. It’s always best to talk to your agent in-depth about the specifics of your policy to avoid blind spots in coverage.

Cost Of General Liability Insurance

The average oil change shop in America spends between $450-$1,000 per year for $1 million in general liability coverage.

Check out the chart below for a snapshot of average CGL expenditure across a variety of industries:

Graph showing average price of general liability insurance prices per industry

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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Other Types Of Coverage Oil Change Shops 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 other types of insurance all oil change shops should obtain:

Commercial Property Insurance

Acquiring the lifts, hand tools, power tools, and other equipment you have in your shop took a considerable investment on your part. If a disaster were to strike, like a fire, and all your equipment was destroyed, it would likely be a struggle to replace everything. In addition to the damage to any owned real estate, a commercial property insurance policy will help you pay to replace your equipment, up to your policy limits, so you do not have to pay the cost out of pocket.

Workers’ Compensation Insurance

Although specific laws vary by state, most mandate that employers carry workers’ compensation insurance. By carrying coverage, you have the financial backing of your insurer should an employee sustain a work-related injury. Your policy will cover the costs of treating the injury, as well as the costs of paying income that would otherwise be lost while the employee is unable to work.

Types Of Coverage Some Oil Change Shops May Need

In addition to the policies outlined above, there are a few other types of coverage your oil change shop may require depending on certain aspects of your operations. Some of these might not apply to you, so be sure to ask your agent which policies are right for your business.

Commercial Umbrella Insurance

There are situations where the limits of your general liability insurance policy may be exceeded, such as losing a big lawsuit or replacing a one-of-a-kind automobile. When your policy limits are maxed out, you are required to pick up the extra costs—unless you have commercial umbrella insurance. An umbrella policy will take over when your general liability limits are reached.

Commercial Auto Insurance

If your oil change business has one or more vehicles that you use primarily for business purposes, you need to carry a commercial auto insurance policy. In the event of an accident with a company vehicle, the policy will pay for the costs of medical care for you and your employees as well as any damages that result from a business-related trip in the vehicle.

Additional Steps To Protect Your Business

Although it’s easy (and essential) to invest in business insurance, it should not be your frontline defense. Yes, insurance will compensate for your business’ financial losses after an incident occurs, but it’s much better to avoid losses altogether.

With this in mind, here are three things you can do to better protect your business:

  • Use legally robust contracts and other business documents. (We offer free templates for some of the most common legal forms.)
  • Set up a limited liability company (LLC) to protect your personal assets. (Refer to our guide for step-by-step instructions on how to form an LLC in your state.)
  • Streamline your business’ internal processes. This will remove unnecessary variables from common tasks and create a safe, consistent environment for conducting business.