Garage Liability Insurance Australia 2025: Coverage, Costs & Updates

Running an automotive business—whether you own a repair shop, dealership, or a mobile mechanic service—means facing unique risks every day. From accidental property damage to third-party injuries, the financial consequences of an unexpected incident can be severe. That’s where garage liability insurance steps in, acting as the financial safety net every Australian automotive business should have, especially as regulations and risks evolve in 2025.

What Is Garage Liability Insurance?

Garage liability insurance is a specialised business policy designed for those in the automotive industry. It protects businesses against claims of bodily injury, property damage, and certain legal costs that can arise from day-to-day operations. Unlike standard public liability insurance, garage liability policies are tailored for the specific exposures faced by workshops, dealerships, panel beaters, car detailers, and more.

Coverage typically includes:

- Third-party injuries on your premises (e.g. a customer slips in your workshop)

- Damage to customer vehicles under your care

- Property damage caused by your operations (e.g. test-driving incidents)

- Legal defence costs if you are sued

In 2025, with the rise of electric vehicles and stricter safety standards, many insurers are adapting garage liability products to reflect new risks—such as battery fires, cyber-attacks on connected cars, and compliance with updated Australian Consumer Law (ACL) provisions.

Why Garage Liability Insurance Is Essential in 2025

The automotive sector is rapidly evolving. Workshops and dealerships are dealing with more complex vehicles, new technologies, and changing customer expectations. In response, the Australian Prudential Regulation Authority (APRA) and the Insurance Council of Australia have both flagged higher scrutiny on business liability insurance in the sector for 2025.

Key reasons to review your coverage now:

• Rising claims costs: Repair bills for EVs and advanced driver-assist systems can be much higher than for older cars, increasing potential liability exposure.

• Updated legislation: The 2025 updates to the ACL mean stricter obligations for automotive businesses regarding consumer rights and vehicle safety disclosures.

• Cyber risks: If your business handles connected vehicles or stores customer data electronically, cyber liability add-ons are now highly recommended.

• Mandatory insurance for licenses: In some states, holding a valid garage liability policy is a requirement for business licensing, especially for vehicle traders and repairers.

Real-world example: In early 2025, a Melbourne auto workshop faced a $200,000 claim after a faulty repair led to an EV battery fire in a customer’s vehicle. Their tailored garage liability policy covered the property damage, legal fees, and compensation costs, preventing severe financial loss.

How to Choose the Right Garage Liability Cover

With insurers updating their offerings, it’s essential to review your policy details and ensure you’re not underinsured—or paying for unnecessary extras.

• Assess your business activities: Do you offer vehicle storage, towing, or sell parts? Make sure your policy reflects every aspect of your operations.

• Check limits and exclusions: Standard policies may not cover test drives, sub-contractors, or cyber incidents. Ask for endorsements or add-ons as needed.

• Compare excess and premium: In 2025, premiums have increased by 8–12% on average for the automotive sector, but shopping around can reveal substantial differences in coverage and cost.

• Compliance with new standards: Ensure your insurer is up to date with APRA’s 2025 guidance and any state-based licensing requirements.

Pro tip: Many brokers now offer tailored packages that bundle garage liability, property, and cyber cover, simplifying your insurance management and often reducing overall costs.

Conclusion: Protect Your Business’s Future

Garage liability insurance isn’t just a regulatory box to tick—it’s a cornerstone of financial resilience for any automotive business in Australia. With 2025 bringing new risks and tighter regulations, now is the time to review, update, or secure coverage that matches your operations. The right policy lets you focus on running your business with confidence, knowing you’re protected from the unexpected.