What is a garage automobile policy?

It is the auto policy for businesses that repair, sell, store or tow vehicles. It covers liability for driving owned, customers' and other vehicles, accident benefits, damage to the vehicles you own, and, if you buy that section, your liability for damage to customers' vehicles in your care. In Ontario it is a standard form called the OAP 4.

Are customers' cars covered while they are in my shop?

Only if your garage policy includes coverage for customers' automobiles, Section 6 on Ontario's OAP 4. It has a collision part for road tests and shop accidents and a specified perils part for fire, theft, vandalism and weather. Limits are set by location, and you declare a maximum number of customers' vehicles, so the numbers must match your busiest days.

Does my general liability policy cover damage to a customer's vehicle?

Generally not. Liability policies exclude property in your care, custody or control, and a customer's car in your bay is exactly that. Damage to customers' vehicles is insured under the garage automobile policy. Damage caused by faulty work itself, such as an engine failing after a repair, is handled differently by each insurer, so the wording needs checking.

Are test drives covered for a car dealership?

Ontario's garage policy extends coverage to anyone driving with the owner's consent in connection with your business, which includes a prospective buyer on a test drive. Dealer plates may only be used on inventory offered for sale, for private use in Ontario or purposes related to the sale. Keep a copy of every test driver's licence on file.

Is theft of parts from cars on my lot covered?

Often not. Ontario's garage policy excludes theft from an open lot or unroofed space except theft of an entire vehicle, so stolen catalytic converters, wheels or parts from cars parked outside are usually not covered. For customers' vehicles, an endorsement can extend cover to comprehensive damage, including open lot theft. Owned inventory needs its own review.

What insurance does a tow truck operator need in Ontario?

Ontario tow operators need a tow certificate, and the regulation requires at least $2,000,000 of liability coverage for injury, death and property damage, $100,000 for damage to vehicles in their care, custody or control, and $50,000 of cargo liability, per claim. Vehicle storage operators must carry the same minimums. Many contracts call for higher limits.

Does a gas station need pollution insurance?

In most cases, yes. Standard liability policies exclude or sharply limit pollution, and a leaking underground tank or line can cause cleanup costs and neighbour claims far larger than the property's value. Storage tank pollution liability covers those losses. Insurers will ask for leak detection, tank testing and corrosion protection records, which licensed Ontario fuel retailers must keep.

Do I need a separate policy for my parts van or shuttle?

Not always. Vehicles you own and use in the garage business can be insured on the garage automobile policy. Some businesses insure delivery vans, shuttles or tow trucks on a separate commercial auto or fleet policy instead, depending on the vehicle and insurer. Either way, every vehicle and regular driver must be declared.

How is automotive insurance priced?

Each part is rated on its own exposure. The garage sections depend on drivers and their records, plates, inventory values and the number of customers' vehicles you hold. Property is rated on construction, occupancy, fire protection and exposure, and liability on revenue, payroll, the work you do and your claims history. A spray booth or fuel tank changes the rating noticeably.

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Automotive Business Insurance Packages

One program for the vehicles you own, the customers' vehicles you hold, and the shop around them.

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In short

An automotive business needs a garage automobile policy for the vehicles it owns, drives and holds for customers, including liability for damage to customers' vehicles in its care. Around that sit commercial general liability for the premises and the work, property and business interruption for the building, tools and stock, and crime coverage. Dealers add inventory and test-drive cover, gas stations add pollution liability, and tow operators must meet provincial minimums.

Last reviewed October 26, 2026

Automotive segments we insure, from repair shops and dealers to car washes, gas stations and towing: 7; Automotive segments we insure, from repair shops and dealers to car washes, gas stations and towing
Canadian insurers we compare for automotive risks: 17; Canadian insurers we compare for automotive risks
Vehicles reported stolen in Canada in 2025, down 18% from 2024 (Équité Association): 46,999; Vehicles reported stolen in Canada in 2025, down 18% from 2024 (Équité Association)
Minimum liability insurance for an Ontario tow operator (O. Reg. 167/23): $2M; Minimum liability insurance for an Ontario tow operator (O. Reg. 167/23)

Automotive businesses hold assets that drive away. A repair shop is responsible for every customer's car in its bays and on its lot. A dealership carries a lot full of inventory that thieves target, and lets strangers test-drive it. Gas stations store fuel underground, and tow operators work at the roadside under provincial insurance minimums.

We build automotive programs around the way you actually operate: a garage automobile policy with the right limits for customers' vehicles and owned inventory, liability for the premises and the work, property and business interruption for the building and equipment, and the crime, pollution and cargo coverage your segment needs.

What the package includes

Garage automobile policy, including Ontario's OAP 4, for owned, customers' and non-owned vehicles
Liability for damage to customers' vehicles in your care, custody or control
Physical damage to dealer inventory, on a reporting or co-insurance basis
Commercial general liability for premises, operations and completed work
Property for buildings, tools, diagnostic equipment, parts and tire stock
Business interruption and equipment breakdown for lifts, booths and wash systems
Commercial crime for employee theft, fraud and funds-transfer losses
Storage tank and environmental pollution liability
Cargo and care, custody or control limits for towing and storage operators

Automotive insurance by type of business

Automotive businesses handle valuable vehicles, many owned by someone else. What changes by segment is how long they stay, who drives them, and what else is on site: paint, fuel, hoists or a lot full of inventory.

The core exposures and coverages for each automotive segment
Segment	Biggest exposures	Core coverages
Auto repair and body shops	Damage to customers' vehicles in the shop or on road tests, faulty work, paint booth fires, injured customers in the bays	Garage policy with customers' automobiles cover, CGL, property, tools and equipment; see auto repair shop insurance
New and used dealerships	Theft and hail damage to inventory, test drives, dealer plate use, sales disputes, employee dishonesty	Garage policy with owned-automobile physical damage, CGL, commercial crime, cyber, property
General garages and tire shops	Customers' vehicles stored overnight, wheel-off incidents, lifts and compressors, stock of tires and parts	Garage policy, CGL, equipment breakdown, property for stock; see garage insurance
Auto detailers	Paint, interior or glass damage during work, mobile operations at client sites, keys in your care	Customers' vehicle cover, CGL, commercial auto for the van; see auto detailer insurance
Car washes	Vehicle damage from equipment, slip-and-fall in wet bays and winter lots, mechanical breakdown	CGL, customers' vehicle cover, property, equipment breakdown; see car wash insurance
Gas stations and fuel retailers	Fuel leaks and spills, fire, robbery, drive-offs and canopy damage	Property, CGL, storage tank pollution liability, crime; see gas station insurance
Towing and vehicle storage	Damage to towed and stored vehicles, roadside injuries, cargo inside vehicles, regulatory minimums	Garage or tow auto policy, care, custody or control cover, cargo and fleet coverage

The core coverages in an automotive program

Most automotive programs combine a specialist auto form with a standard commercial package. The auto form handles vehicles. The package handles the building, the work and the people.

Garage automobile policy: liability for driving owned, customers' and other vehicles, physical damage to vehicles you own, and liability for customers' vehicles in your care.
Commercial general liability: injuries and damage from your premises and operations, and completed-operations claims after the vehicle leaves.
Commercial property: the building or your improvements, hoists, diagnostic scanners, and parts and tire stock, at replacement cost.
Business interruption: lost profit and continuing expenses while a fire or flood keeps the bays closed.
Equipment breakdown: mechanical or electrical failure of compressors, booth systems and wash equipment.
Commercial crime: employee theft of cash, parts or vehicles, and funds-transfer fraud.
Pollution and environmental liability: spills, leaks and waste fluids, which standard liability wordings exclude or sharply limit.
Umbrella liability above the garage and CGL limits, often required by landlords, manufacturers and lenders.

How the Ontario garage automobile policy (OAP 4) works

In Ontario, garage businesses are insured on the Ontario Garage Automobile Policy (OAP 4), a standard form approved by the Financial Services Regulatory Authority of Ontario. The current edition is approved for use on or after July 1, 2026. It is a sectioned policy, and the insurer is liable only under the sections for which a premium is shown on the certificate. A section with no premium is a section you don't have.

Other provinces use their own garage forms, and in provinces with a public auto insurer the compulsory part is placed differently. The principles below carry across, but the section numbers are Ontario's.

The eight sections of the Ontario Garage Automobile Policy (OAP 4)
Section	What it covers	What to check
1. Third party liability	Injury to others and damage to their property from owned automobiles, customers' automobiles and non-owned automobiles	Limit; it excludes damage to customers' vehicles and to property in your care, which belong in Section 6
2. Accident benefits	Statutory accident benefits for people injured in an automobile accident	Benefit levels and any optional increases
3. Uninsured automobile	Injury caused by uninsured or unidentified drivers	Applies with the liability section
4. Direct compensation, property damage	Damage to insured automobiles caused by an at-fault driver in Ontario	Deductible
5. Owned automobiles	Collision or upset, comprehensive, specified perils, or specified perils excluding theft, for vehicles you own, including inventory	Limit per location, reporting basis, open-lot theft limitation
6. Customers' automobiles	Your legal liability for damage to customers' vehicles in your care, custody or control	Collision and specified perils limits, maximum number of customers' vehicles per location
7. General provisions and exclusions	Definitions, additional insureds, excluded uses and premium adjustment	Who counts as a customer's vehicle, loaner and rental use
8. Statutory conditions	The conditions every Ontario auto policy carries	Notice of claim and material change

Section 1 protects you when a technician on a road test hits another car. It does not pay for the customer's car itself. That exposure lives in Section 6 or nowhere. Our commercial auto insurance page covers vehicles outside the garage form, such as a parts delivery van insured on its own policy.

Customers' vehicles in your care: where the claims are

Under the OAP 4, a customer's automobile is one owned by someone else while it is in your care, custody or control, or being towed by you. Section 6 has two parts, and they work differently.

Collision or upset (6.1): pays your legal liability when a customer's vehicle is damaged in a collision or upset, for example on a road test or when it rolls off a hoist, plus the customer's substitute transportation costs. A deductible applies to each occurrence.
Specified perils (6.4): pays your legal liability for fire, theft or attempted theft, vandalism, windstorm, hail, rising water, explosion and other listed perils. Limits are set per location, and no deductible applies to fire or lightning losses.
Maximum number of customers' vehicles (6.8): the certificate states a maximum for each location. If more customer vehicles are on site at the time of a loss, the insurer pays only in proportion. Declare 10 and have 20 on site at a fire, and you recover half.
Theft from an open lot (6.6(c)): specified perils cover excludes theft from an open lot or unroofed space you own, rent or control, except theft of an entire vehicle. Stolen catalytic converters, wheels and parts from cars parked outside fall into this gap. An endorsement can extend cover to comprehensive damage, including open lot theft.
Contents: Section 6 excludes the contents of customers' vehicles, other than their attached equipment. Tools, laptops and sports gear left in the car are not covered.

Section 6 responds to accidental damage. Damage caused by the work itself, such as an engine that fails after an incorrect repair, is not a collision or a specified peril, so it falls to your liability coverage and its exclusions. Your garage policy is also first-loss insurance for a customer's vehicle under Sections 1 and 3, so your insurer, not the customer's, answers first for liability while the vehicle is in your hands.

Dealerships: registration, dealer plates and test drives

In Ontario, the Motor Vehicle Dealers Act, 2002 says no person may act as a motor vehicle dealer or salesperson unless registered under the Act, and the Ontario Motor Vehicle Industry Council (OMVIC) administers that registration. Other provinces license dealers through their own regulators.

Dealer plates come with rules of their own. Under Regulation 628 under Ontario's Highway Traffic Act, a Dealer permit and plate may be issued to a registered dealer, and a Dealer plate may be used only on a vehicle the dealer owns as inventory offered for sale, for private use in Ontario or for purposes related to the sale. A separate Service permit and plate is available to repair and customizing businesses for road testing and repair of vehicles in their possession. Misusing a plate invites regulatory trouble and a coverage dispute.

Test drives: the OAP 4 extends coverage to anyone who drives with the owner's consent in connection with your business, which includes a prospective buyer on a test drive. Copy the driver's licence first.
Loaners: lending an owned vehicle to a customer while their car is in for service, or for up to 30 days while they wait for a vehicle they have ordered, is not treated as renting it out. Charging for vehicles as a rental business is an excluded use and needs separate cover.
Inventory values: owned-vehicle physical damage can be written on a monthly reporting basis. You report the value of inventory held for sale at each location within 30 days after each month end. If the first report is late, the policy caps the insurer's liability at 75% of the limit.
Co-insurance basis: if inventory is instead written on a co-insurance basis, you must insure at least 80% of the actual cash value at each location, or share in the loss.

Dealers also face exposures the garage form doesn't touch: deposit and wire fraud, employee dishonesty in the finance office, and customer data held in the dealer management system. Commercial crime and cyber coverage close those gaps.

Vehicle theft from lots and service yards

Organized theft targets exactly what automotive businesses hold: late-model vehicles, keys and parts. Équité Association reported 46,999 vehicle thefts in Canada in 2025, down 18% from 57,359 in 2024, with Ontario down 22%. Thefts are falling, but insurers still underwrite lot security closely.

The policy wording matters here. Under the OAP 4, both owned inventory and customers' vehicles carry an open-lot limitation: theft from an open or unroofed space you control is covered only for theft of an entire vehicle. Owned-vehicle cover also excludes losses where you were tricked into a voluntary transfer of title, which is where fraudulent buyers with fake payment or financing documents fall.

Key control: a locked key box or electronic key management, with a sign-out log.
Perimeter: lighting, monitored cameras, gates or bollards, and parking high-value units inside overnight.
Payment verification: confirm funds and financing before a vehicle leaves the lot.
Parts theft: the open-lot limitation applies to owned inventory under both comprehensive and specified perils, so stolen catalytic converters and wheels from vehicles parked outside are a gap to discuss with us. For customers' vehicles, an endorsement can extend cover to open lot theft.

Paint booths, hoists and fire

Body shops combine flammable paints and solvents, spray booths, welding and grinding in one building, and many shops share that building with other tenants. Underwriters want to see a booth installed and maintained to code, with a fire suppression system, regular filter changes, and clean housekeeping around oily rags and waste.

The financial damage goes well beyond the building. A fire can destroy the customers' vehicles in the bays (Section 6 specified perils), your owned vehicles (Section 5), tools and diagnostic equipment (property), and months of revenue (business interruption). Lifts, compressors and paint booth air systems also fail mechanically without any fire, and those losses need equipment breakdown cover. If you lease your premises, your lease probably also requires you to insure your improvements and name the landlord as an additional insured. Our post on the commercial lease insurance clause explains the wording.

Gas stations, fuel tanks and environmental liability

Fuel storage produces claims that can outlast the business. A slow leak from an underground tank or line can migrate onto a neighbour's land or into groundwater for years before anyone notices, and cleanup costs can exceed the value of the property.

In Ontario, retail fuel outlets are regulated by the Technical Standards and Safety Authority (TSSA) under O. Reg. 217/01, Liquid Fuels, and a retail facility must be licensed. TSSA's Liquid Fuels Compliance Standard, in effect since April 14, 2025 for all licensed retail liquid fuels facilities, lists high-risk items including current precision leak test records, annual leak detection tests, corrosion protection reports for underground tanks, and investigation of unexplained product loss. Those records are also what a pollution underwriter asks to see.

Storage tank pollution liability: cleanup of your site and third-party claims from a leak or spill, which standard CGL wordings exclude or limit.
Repair shops: used oil, antifreeze, solvents and parts washers create pollution exposure even without a fuel tank. Ask what pollution cover your liability policy actually includes.
Buying a site: a former gas station or garage can carry historic contamination. Do environmental due diligence before you buy.

Towing and vehicle storage operators

Ontario regulates towing under the Towing and Storage Safety and Enforcement Act, 2021. No one may provide towing services without a tow certificate, or vehicle storage services without a vehicle storage certificate. The general regulation, O. Reg. 167/23, sets minimum insurance for both, with an insurer licensed under the Insurance Act, in respect of any one claim.

Minimum insurance for Ontario tow operators and vehicle storage operators (O. Reg. 167/23, ss. 11 and 26)
Coverage	Minimum per claim	How it is usually placed
Liability for bodily injury, death and property damage	$2,000,000, exclusive of interest and costs	Third party liability on the garage or tow auto policy, with CGL for the yard
Damage to a motor vehicle in the operator's care, custody or control	$100,000	Customers' automobiles cover (Section 6 on the OAP 4) or an equivalent endorsement
Cargo liability	$50,000	Cargo coverage for property in or on the vehicles you tow

These are floors. Heavy towing, high-value recoveries and police or motor club contracts commonly call for higher limits, and your certificate of insurance has to show them.

What automotive insurance costs, and how it's rated

There is no flat price for an automotive program, because each part is rated on its own exposure base. The garage sections are priced on drivers and their records, plates, owned-vehicle values by location and the maximum number of customers' vehicles you hold. Property is priced per $100 of insured value using COPE: construction, occupancy, protection and exposure. Liability is rated on revenue and payroll, the type of work you do, and your claims history.

Market conditions are favourable. Marsh's Global Insurance Market Index put overall Canadian commercial insurance rates down 6% in the third quarter of 2026, with property down 8%. Auto lines depend more on your own loss record.

Declare an accurate maximum number of customers' vehicles per location, with room for your busy season.
Keep driver abstracts on file and limit who road-tests vehicles.
Document fire protection: booth suppression, sprinklers, monitored alarms, and housekeeping routines.
Choose a deductible that matches the small claims you would rather absorb than report, and bundle locations and coverages where it improves terms.

How we build an automotive insurance program

1Map the operation: we confirm what you do on site and off, from repairs and sales to detailing, fuel and towing, and which entity holds the registration, plates and leases.
2Count the vehicles: we establish owned inventory values by location, the busiest-day count of customers' vehicles, plates, drivers and loaner use.
3Inspect the hazards: we document spray booths, fuel systems, lifts, lot security and key control, the things underwriters price.
4Check the requirements: we line limits up against regulation, your lease, manufacturer or franchise agreements and towing contracts.
5Market it: we take the submission to the insurers on our panel of 17 whose appetite fits your segment.
6Compare on wording: we set out each option's sections, limits, deductibles, open-lot and faulty-work terms side by side, then review the program every year and whenever you add a location, a service or a tow truck.

Good to know

Frequently asked questions

What is a garage automobile policy?: It is the auto policy for businesses that repair, sell, store or tow vehicles. It covers liability for driving owned, customers' and other vehicles, accident benefits, damage to the vehicles you own, and, if you buy that section, your liability for damage to customers' vehicles in your care. In Ontario it is a standard form called the OAP 4.
Are customers' cars covered while they are in my shop?: Only if your garage policy includes coverage for customers' automobiles, Section 6 on Ontario's OAP 4. It has a collision part for road tests and shop accidents and a specified perils part for fire, theft, vandalism and weather. Limits are set by location, and you declare a maximum number of customers' vehicles, so the numbers must match your busiest days.
Does my general liability policy cover damage to a customer's vehicle?: Generally not. Liability policies exclude property in your care, custody or control, and a customer's car in your bay is exactly that. Damage to customers' vehicles is insured under the garage automobile policy. Damage caused by faulty work itself, such as an engine failing after a repair, is handled differently by each insurer, so the wording needs checking.
Are test drives covered for a car dealership?: Ontario's garage policy extends coverage to anyone driving with the owner's consent in connection with your business, which includes a prospective buyer on a test drive. Dealer plates may only be used on inventory offered for sale, for private use in Ontario or purposes related to the sale. Keep a copy of every test driver's licence on file.
Is theft of parts from cars on my lot covered?: Often not. Ontario's garage policy excludes theft from an open lot or unroofed space except theft of an entire vehicle, so stolen catalytic converters, wheels or parts from cars parked outside are usually not covered. For customers' vehicles, an endorsement can extend cover to comprehensive damage, including open lot theft. Owned inventory needs its own review.
What insurance does a tow truck operator need in Ontario?: Ontario tow operators need a tow certificate, and the regulation requires at least $2,000,000 of liability coverage for injury, death and property damage, $100,000 for damage to vehicles in their care, custody or control, and $50,000 of cargo liability, per claim. Vehicle storage operators must carry the same minimums. Many contracts call for higher limits.
Does a gas station need pollution insurance?: In most cases, yes. Standard liability policies exclude or sharply limit pollution, and a leaking underground tank or line can cause cleanup costs and neighbour claims far larger than the property's value. Storage tank pollution liability covers those losses. Insurers will ask for leak detection, tank testing and corrosion protection records, which licensed Ontario fuel retailers must keep.
Do I need a separate policy for my parts van or shuttle?: Not always. Vehicles you own and use in the garage business can be insured on the garage automobile policy. Some businesses insure delivery vans, shuttles or tow trucks on a separate commercial auto or fleet policy instead, depending on the vehicle and insurer. Either way, every vehicle and regular driver must be declared.
How is automotive insurance priced?: Each part is rated on its own exposure. The garage sections depend on drivers and their records, plates, inventory values and the number of customers' vehicles you hold. Property is rated on construction, occupancy, fire protection and exposure, and liability on revenue, payroll, the work you do and your claims history. A spray booth or fuel tank changes the rating noticeably.

Sources

Ontario Garage Automobile Policy (OAP 4), approved for use on or after July 1, 2026 (copy published by West Wawanosh Mutual Insurance). Financial Services Regulatory Authority of Ontario, standard form, July 1, 2026.
Motor Vehicle Dealers Act, 2002, S.O. 2002, c. 30, Sched. B. Government of Ontario, e-Laws, Current consolidation.
R.R.O. 1990, Reg. 628: Vehicle Permits, under the Highway Traffic Act (dealer and service permits and plates). Government of Ontario, e-Laws, Current consolidation.
O. Reg. 167/23: General, under the Towing and Storage Safety and Enforcement Act, 2021. Government of Ontario, e-Laws, Current consolidation.
Compliance Standard for Liquid Fuels Facilities in Effect. Technical Standards and Safety Authority (TSSA), April 14, 2025.
Auto thefts down 18% in 2025 (Équité Association report, via The Canadian Press). Global News, February 11, 2026.
Canada commercial insurance rates fall for third straight year (Marsh Global Insurance Market Index, Q3 2026). Insurance Business Canada, October 21, 2026.

This page is general information, not insurance or legal advice. Coverage depends on your policy wording and the insurer. Speak with a licensed broker about your situation.

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