Mechanic Insurance NZ: Covering Customer Vehicles in Your Workshop
Mechanic insurance in NZ is liability and property cover for a workshop, often called motor trade insurance: it can respond to damage to customer vehicles in your care, faulty-repair claims, the premises and tools. Standard public liability often excludes the customer's vehicle while it is in your custody, so ask about that specifically. Policies and prices differ, so a licensed adviser needs a short call first.
In short
- Your biggest exposure is other people's cars. A vehicle in your workshop, on your forecourt or on a test drive is in your care, and that is where general liability policies tend to draw a line.
- "Mechanic liability" and "motor trade" policies are packages, and what sits inside them differs. Ask which parts each picks up: custody of vehicles, faulty repairs, premises, tools, people.
- Read the exclusions before the limits. Wear and tear, the cost of redoing your own work, and fines are the usual ones.
Who asks mechanics for proof of cover
- Fleet customers
- Dealerships
- Councils
- A minimum public liability limit before they send work
Customer cars in your care
Many liability wordings set aside property in your custody.
A repair that fails
Brakes, steering or a cambelt blamed for a crash.
A fire shuts the workshop
Rent and wages keep going while the hoists are replaced.
Work out what to raise
Tick what applies to you
- Customer cars sit in our workshop or yard
Standard public liability often excludes a customer's vehicle while it is in your custody.
Covers to raise: Public liability, Premises, stock and interruption
- We do brakes, steering or cambelts
A failed repair can lead to a claim involving cars, property and people.
Covers to raise: Public liability
- We service fleets or dealerships
They sometimes ask for a certificate and a minimum limit.
Covers to raise: Public liability
- We have hoists, plant and a building to protect
Covers to raise: Premises, stock and interruption
- We employ apprentices or technicians
Covers to raise: Statutory liability
- Scanners and tools go out in a van
Covers to raise: Tools and equipment
- We also sell vehicles
The risks for dealers are different. Raise it on the first call.
Covers to raise: Business vehicles, Premises, stock and interruption
- We handle chemicals, lifts and noise daily
Covers to raise: Statutory liability
What these covers do not pay
- Redoing a repair that was done wrongly.
- A customer's vehicle in your custody, under many public liability wordings.
- Wear and tear on hoists and plant.
- Lost income that is not tied to an insured event.
- Health and safety fines, which can never be insured (Health and Safety at Work Act 2015, s 29).
General information only. Whether a cover responds depends on the policy wording.
Which clause is in your contract?
Limitation of liability
A cap on what you could owe the client if something goes wrong, often tied to your fees or a set figure. It can also exclude certain losses such as lost profit.
Covers to raise: Professional indemnity, Public liability
What it does not decide: It does not decide what your insurance pays. A cap in the contract may sit below or above your policy limit, and some claims, such as personal injury, may fall outside it.
Workmanship warranty
You promise to put right defective work for a set period after completion. On residential building work, the Building Act 2004 also implies warranties that sit alongside the contract.
Covers to raise: Public liability, Professional indemnity, Contract works
What it does not decide: It does not decide whether insurance pays to redo your own faulty work. Public liability generally responds to resulting damage to others, not the cost of fixing the work itself.
Own tools and plant
The contract says you bring and look after your own tools, equipment or machinery, so damage or theft of them sits with you rather than the client.
Covers to raise: Tools and equipment, Business vehicles
What it does not decide: It does not decide whether those items are insured, on site or in a vehicle, or hired in. Contract works and public liability policies usually do not pick up your own tools.
General information, not legal advice. The full clause and the policy wording decide how it applies.
Check your certificate of currency against the contract
Check the insured name, limit and dates match the contract. The policy wording, not the certificate, decides what is covered. How a certificate of currency works
What each cover may pay, and what it usually does not
Public liability
- May respond to
- Harm to others from your repairs and on your premises.
- Common trigger
- A repair blamed for a crash.
- Usually not covered
- Redoing the repair, and often customer cars in your care.
Premises, stock and interruption
- May respond to
- Building contents, hoists and plant, and lost income after a fire.
- Common trigger
- A fire, flood or break-in that stops trading.
- Usually not covered
- Wear and tear and gradual damage.
Tools and equipment
- May respond to
- Scanners and tools that move around.
- Common trigger
- Theft from a van or call-out.
- Usually not covered
- Wear and tear, and gear left unsecured.
Statutory liability
- May respond to
- Defence costs if WorkSafe investigates.
- Common trigger
- An incident involving an apprentice or a lift.
- Usually not covered
- Health and safety fines, which can never be insured.
Business vehicles
- May respond to
- Your own work vehicle, and stock if you sell cars.
- Common trigger
- A crash or theft of your vehicle.
- Usually not covered
- Customer cars in your care, unless the policy adds them.
If something goes wrong
A brake job is blamed for a crash
A customer crashes after a brake repair and says the work was at fault.
May respond: Public liability
Have ready
- The job card and parts invoices
- The vehicle's service history
- Any inspection or crash report
A customer's car is damaged in the workshop
A car on the hoist falls while in your care. Many wordings exclude customer cars in your custody unless the policy adds them.
May respond: Public liability
Have ready
- Photos of the car
- The drop-off paperwork
- Your policy wording on customer vehicles
A fire shuts the workshop
A fire stops work for weeks while rent and wages carry on.
May respond: Premises, stock and interruption
Have ready
- The fire brigade report
- A list of plant and stock
- Recent accounts for income and wages
Typical examples, not real claims. ACC deals with most injuries, so an injury claim is mostly about property and legal costs. Whether a claim is paid depends on the policy wording and the facts.
What a workshop is insuring
Most trades risk a client's building. A mechanic risks a client's transport, often worth tens of thousands of dollars, sitting behind a roller door overnight.
| What goes wrong | The question to ask |
|---|---|
| A customer's car is stolen, burned or damaged while with you | Is the vehicle covered in my care, custody or control, including on a test drive? |
| A repair fails after it leaves and causes damage or injury | Does liability cover the harm, and how does it treat redoing the work? |
| A customer or supplier is hurt on your premises | Is public liability included, at what limit? |
| The building, hoist, compressor or scanner is damaged | Is there cover for property, plant and tools? |
| A fire shuts the workshop for months | Is there business interruption cover, and for how long? |
Customer vehicles in your care
Public liability pays for harm you cause to other people or their property. Many wordings set aside property in the insured's care, custody or control, which describes a customer's car in your bay. Wordings vary, so do not assume either way.
Cover for vehicles in your care is often a separate extension, sometimes called garage keepers or motor trade cover. Questions that matter:
- Does it cover fire, theft, malicious damage and accidental damage on your premises?
- Does it cover the car while you or your staff drive it, for a test drive, WoF run or parts trip? Who may drive?
- What is the limit for one vehicle and for all vehicles at once?
- Are vehicles parked outside covered, or only those inside?
- Is there an excess on customer cars, and who pays it?
If you hold stock, such as cars repaired for resale, tell the adviser. That is a different risk.
Liability for your repairs
When a brake job, steering repair or cambelt is blamed for a crash, the claim can involve the car, other vehicles, property and people. Customers also have statutory rights: the Consumer Guarantees Act 1993 includes a guarantee that services are carried out with reasonable care and skill (section 28). Because the Accident Compensation Act 2001 bars court claims for compensatory damages for covered personal injury (s 317), claims often turn on property damage, vehicle damage and legal costs. See our public liability page.
Most policies pay for the damage that results from defective work, but not the cost of putting your own work right. Ask the adviser to explain that with your own jobs in mind, such as an engine rebuild or a hybrid battery replacement.
Premises, plant, tools and interruption
Hoists, wheel balancers, alignment rigs, scanners, compressors and welders are expensive to replace. Business property insurance covers contents and plant against fire, water and theft, and tool insurance handles tools that move around. With your lease in hand, check who insures the building (see commercial property insurance) and who is responsible for the hoists you bolted in. Oil, solvents and tyres add fire load, and insurers may ask how you store them.
A fire or flood can stop income while rent, wages and finance keep going. Business interruption insurance responds to loss from insured physical damage, not a slow month. Think about how long it would take to replace a hoist and reopen, then ask what indemnity period fits.
Staff and statutory liability
Workshops employ apprentices, and the work involves heavy lifts, chemicals and noise. Statutory liability can respond to defence costs if WorkSafe investigates. It can never pay a fine: section 29 of the Act makes any insurance for such fines of no effect.
What clients ask for
Mechanics are not licensed as a trade the way electricians and plumbers are, so no registration body sets an insurance level. Fleet customers, dealerships and councils sometimes ask for a certificate of currency and a minimum public liability limit before they send work. If you also sell vehicles, the risks for dealers are different again, so raise it on the first call.
What is usually excluded
- wear and tear, and gradual deterioration
- the cost of redoing your own defective work
- fines and penalties, including under health and safety law
- vehicles outside the conditions set, such as unlocked yards or unattended keys
- drivers who are not named, or a limited test-drive area
- racing or track days, if you do performance work
For your own income see the tradie insurance page, income protection for tradies and business protection. The wider picture is in the business insurance hub.
How we help
A Smiths adviser will phone you to talk through which covers to look at. Some business covers we refer to another licensed Financial Advice Provider, and we will tell you who, and how they are paid, before your details go to that firm. There is no instant online quote. Smiths Insurance & KiwiSaver may receive a commission or referral payment if you buy. Cover and price depend on insurer underwriting and the policy wording. Financial advice is provided by Craig Smith Business Services Limited, trading as Smiths Insurance & KiwiSaver, a licensed Financial Advice Provider (FSP712931).
Frequently Asked Questions
Does public liability cover a customer's car while it is in my workshop?
Often not. Many public liability wordings exclude property in your care, custody or control. Cover for vehicles in your care is usually a separate extension or section, so ask about it by name.
What is the difference between mechanic liability and motor trade insurance?
Both names describe a package that can include liability, vehicles in your care, and property. What is in the package depends on the policy.
Does it cover test drives?
Some policies do and some limit it, for example by driver or area. Tell the adviser how your staff move customer cars.
Does liability cover the cost of redoing a faulty repair?
Usually not. Policies tend to respond to damage caused by the faulty work rather than the cost of fixing the work itself. Check the exclusions.
References
- Consumer Guarantees Act 1993, s 28, legislation.govt.nz
- Health and Safety at Work Act 2015, s 29, legislation.govt.nz
- Accident Compensation Act 2001, s 317, legislation.govt.nz
- business.govt.nz, types of insurance
Related industries
Protect the people behind the business
Liability cover protects the business from claims. If you or a business partner could not work, or died, key person and shareholder cover can help keep the business, and your family, going.
- Key person cover, if the business relies on you
- Shareholder cover, so partners can buy each other out
- Income protection for owners and the self-employed
Know where customer cars are covered
A licensed Smiths adviser phones you and asks how customer vehicles move through your workshop, including test drives. If we refer you to another licensed firm, we tell you who first. Smiths Insurance & KiwiSaver may receive a commission or referral payment if you buy.
A licensed Smiths adviser phones you. If we refer you to another licensed firm we tell you who first and how they are paid.
Read the full insurance guides
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