Garage keepers liability insurance: An untapped market niche

By Gideo SARFO

Ghana’s automotive servicing and repair industry represents a significant untapped opportunity for insurance providers. With approximately 671 registered garages and auto repair shops across the country, plus 115 distinct car repair and maintenance service providers, the sector’s economic footprint is substantial. Yet despite this extensive network of operations, concentrated primarily in Greater Accra and Kumasi, not a single Garage Keepers Liability Insurance policy is currently underwritten in the Ghanaian market.

Understanding the Market Landscape

Ghana’s automotive repair sector is diverse. From the informal roadside mechanics to the established operations like Toyota Ghana, Rana Motors, CFAO Motors, Tractafric Motors, Zonda Tec Ghana, Era Truck Ghana, Tiger Import and Service Limited, UB Auto Garage, Carl Auto Garage, and AutoShack Ghana, the industry spans a wide spectrum. Major hubs such as Abossey Okai in Accra and Suame Magazine in Kumasi host clusters of workshops serving thousands of vehicles daily. Additionally, DVLA-accredited stations and professional centers such as Professional Auto Centre, Bensam Auto Services Ltd, with centers in the Greater Accra region and Takoradi, Afrigyei, Awoshie; Auto Checks, Koforidua; Awompi Grps, Spintex; DMVS, Winneba; Elie Company Limited, Tema; Garden Gate, Abuakwa; Gladly Humble Thy Self, Kasoa; MASVIC (various locations including Tema, Techiman, Swedru, Offinso, among others, handle critical inspection and certification services. The informal mechanics make up over 60% of this market.

Another market segment that needs this insurance is the vehicle-washing bays. With hundreds of vehicle-washing bays across the country, none of them has any form of insurance to cover potential financial losses when a washer or cleaner damages a customer’s vehicle while under their care, custody, and control.

Also, most fuel stations in Ghana have either vehicle servicing or washing bays attached to their facilities. Unfortunately, none of them has a Garage Keepers Liability insurance to cover damage to customers’ vehicles while under their care, custody, and control.

The Coverage Challenge

Because this policy is not available in the Ghanaian market, clients and brokers purchase any first-party property damage policy, and request coverage “extension” for “care, custody and control” cover. This always creates confusion and usually ends up in court when insureds with Motor Comprehensive Insurance fall on their motor insurers for damage to their vehicles during servicing, repairs, washing, etc. To avoid this coverage gap, let’s look at what Garage Keepers Liability Insurance covers.

Garage Keepers’ Liability Coverage

Garage Keepers Liability Insurance protects automotive garages and service providers against financial losses arising from damage to customers’ vehicles while under their care, custody, or control. For garage owners, this coverage addresses a fundamental business risk and the potential liability for vehicles entrusted to them for servicing, repairs, washing, cleaning, storage, or test drives.

Without this protection, garage operators, vehicle servicing centers, and washing bays face potentially devastating out-of-pocket expenses if customer vehicles are damaged by fire, theft, vandalism, or accidents occurring on their premises.

Business activities covered are loss or damage to customers’ vehicles in the course of washing, cleaning, servicing, repairs, storage, or test drives on the insured’s business premises. Perils or causes of loss covered are loss or damage caused by fire, theft, vandalism, or accidents occurring on the insured’s business premises.

Risk Control Measures

Effective Garage Keepers Liability policies should incorporate specific conditions ensuring responsible risk management. Garages must maintain accurate records of all vehicles received, including detailed intake inspections documenting pre-existing damage. Adequate security measures, such as perimeter fencing, lighting, and watchmen, should be mandatory before coverage is offered.

Policies should require garages to maintain safe working environments compliant with fire safety regulations. Coverage limits should be clearly defined based on the garage’s capacity and the typical vehicle values serviced, with provisions for higher-value vehicles that require additional premium considerations.

Implementation Strategy

To serve this market niche, local insurers can adopt a phased approach through a pilot program targeting established garages or members of the Ghana National Association of Garages. This will help them gather valuable data for pricing models and risk assessment. They can also have partnerships with other industry associations. Partnering with the DVLA, the policy can be part of the requirements to receive accreditation and operate as a DVLA inspection, testing, certification, or approved center. Digital platforms like Rentech Digital, which already compile garage directories, could serve as distribution channels for this policy.

Conclusion

The absence of Garage Keepers Liability Insurance in Ghana’s market represents a clear opportunity for local insurers to introduce a much-needed product. By developing a coverage that addresses the specific risks facing Ghana’s diverse automotive service sector, insurers can create sustainable value for both their businesses and the hundreds of prospective clients operating without this important operational risk protection.

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