Loss Control Strategies For Auto Repair Shops

Running an auto repair shop carries numerous challenges. After all, auto repair shop owners are responsible for performing a wide range of services—whether it’s routine maintenance or significant repairs—to help customers keep their vehicles in good condition and stay safe behind the wheel. What’s more, auto repair operations also carry several liability, employee safety, security and property risks—all of which could lead to costly damages. That’s why it’s critical to have proper loss control measures in place. This blog explains key risks that auto repair shop owners must address and provides helpful strategies they can use to prevent potential claims.

Premises and Completed Operations Liability

The nature of auto repair operations poses various liability concerns. First, having customers in the shop while potentially dangerous tasks are performed (e.g., hot work, the use of specialized tools and the movement of vehicle parts) could lead to serious hazards and subsequent injuries. Second, fixing or adjusting components of customers’ vehicles could leave the shop responsible in the event any customer experiences further damages after being serviced. To minimize liability exposures, auto repair shop owners should follow these precautions:

• Post clear shop signage that instructs customers to keep out of restricted or hazardous areas and directs them to a designated waiting area while their vehicles are serviced.
• Temporarily pause all repair operations that have the potential to cause injuries if a customer must enter a restricted or hazardous area for any reason (e.g., to view their vehicle). Make sure the customer is accompanied by a trusted and experienced employee at all times.
• Utilize floor markings to outline hydraulic lift paths and prevent customers from standing in or walking through these areas.
• Keep the shop parking lot in good condition through regular inspections and maintenance. Repair cracks, potholes and other possible slip and trip hazards as needed. Ensure adequate snow removal and de-icing protocols are in place throughout the property during winter.
• Conduct vehicle repairs using original equipment manufacturer (OEM) parts whenever possible. If OEM parts are unavailable, be sure to retrieve vehicle parts from reputable distributors or manufacturers.
• Ensure employees are properly trained for the task at hand, whether it’s a routine procedure (e.g., an oil change) or a specialty repair (e.g., a brake replacement).
• Maintain detailed records of all vehicle repairs and customer transactions

Employee Safety

As with any employer, auto repair shop owners have a responsibility to protect their employees from illnesses and injuries on the job. Especially in auto repair, safeguarding employees from shop hazards (e.g., flammable materials, electrical equipment, heavy machinery and underground work areas) is vital to prevent potential incidents. With this in mind, auto repair shop owners should implement these employee safety procedures:

• Make sure all areas of the shop—especially those where vehicles are serviced—are adequately ventilated to prevent the potential for carbon monoxide buildup.
•  Provide employees with all necessary personal protective equipment (PPE) for the task at hand. Such PPE may include safety glasses or goggles and cut-resistant gloves. Instruct employees on the prop[1]er use, care and limitations of their PPE.
•  Implement an effective safety training program. Require all new employees to participate in the program, regardless of prior work experience or safety knowledge.
• Equip any work areas located below ground level (e.g., vehicle inspection pits) with safety netting or removable guardrail systems to protect against fall hazards.
• Keep all electrical tools, cords and equipment in good condition through regular inspections and maintenance. Replace damaged items as needed.
• Implement appropriate safety guards on all applicable machinery and equipment. Educate employees on how to recognize if a guard is missing and prohibit guard removal.
• Ensure all hydraulic lifts remain in proper working order through routine inspections and maintenance.

Security and Crime

Because auto repair shops often keep high-value items on-site (e.g., tools, equipment, machinery, customers’ vehicles and extra car parts), these establishments are typically more vulnerable to instances of crime—namely, robbery and theft—than the average business. In the event of such crimes, auto repair shops could experience large-scale losses and reputational damages. As a result, auto repair shop owners should have the following security measures in place:

• Install security cameras throughout the property, especially within areas where customers’ vehicles are stored (e.g., the parking lot). Routinely inspect these cameras to ensure they are working properly.
• Keep all cash, checks and shop receipts in a protective safe until deposit time. Be sure to stagger deposits to prevent criminals from detecting a pattern or schedule and exploiting it.
• Store all shop tools, equipment and machinery in a safe and secure location when not in use (e.g., a locked cabinet or closet). Utilize an appropriate system to keep track of these items.
• Surround the property with adequate fencing, outdoor lighting and “No Trespassing” signage.
• Protect the keys to customers’ vehicles by keeping them in a secure office, safe or lockbox during non-business hours.
• Establish effective inventory control protocols for all vehicle parts.
• Require all shop windows and doors to remain locked during non-business hours. Designate a trusted employee to be in charge of locking procedure.

Property Damage

Auto repair shops face various property exposures— especially as it relates to fire, equipment, vehicle and structural damage. Whether it stems from poor maintenance procedures or a lack of prevention protocols, property damage can cause significant interruptions and is often accompanied by costly repairs or replacements. With this in mind, auto repair shop owners should consider these steps to limit property damage risks:

• Designate areas where hot work tasks (e.g., welding, torch cutting and grinding) can be safely conducted. Such areas must be free of any combustible or flammable materials.
• Establish an effective hot work program to reduce potential fire hazards when these tasks cannot be performed in designated areas.
• Implement a safe and sufficient tire storage system. Dispose of all used tires in a timely and appropriate manner.
• Follow proper housekeeping and sanitation practices within the shop. Avoid letting clutter or trash accumulate on the property, as this can create a fire hazard.
• Require employees to store any oily rags—which have the potential to self-combust—within an appropriate container. Safely dispose of oily rags on a routine basis.
• Install fire extinguishers specifically designed for auto repair hazards throughout the shop. Regularly inspect extinguishers to ensure they are easily accessible and in good condition. Educate employees on proper extinguisher use.
• Store any tanks holding used motor oil outside of the shop. Make sure tank storage procedures comply with all applicable building and safety codes.

Learn More

It’s vital for auto repair shop owners to utilize effective risk management measures to mitigate costly insurance claims and lawsuits. Doing so can offer many advantages—including greater customer satisfaction, fewer liability concerns, a safer work environment and a lowered potential for property damage.

While this blog outlines a range of loss control strategies, auto repair shop owners don’t have to navigate their risk management programs alone. Working with a qualified and experienced insurance professional can make all the difference. Contact us today to discuss coverage options and additional loss control tactics for auto repair shop owners.