How do repair shops deal with risk of a faulty job?

Just curious. If you own a repair shop and your staff forgets to install the oil plug on a customer’s car when doing a $75 oil & filter change, that could easily result in a $5000 expense for the customer’s replacement engine. It might take the profit of a thousand of oil changes before that would ever be paid off. So how do shops deal with this sort of risk? Do they buy liability insurance for repair faults of their own making?

A good shop does, kind of like malpractice insurance for doctors.

Imagine if the brakes failed on your car right after a shop did a brake job.


Yep… and wasn’t there an episode on CT where a car fell off the lift?

Your example of oil is a good one. Back in the 60’s, when service stations still did service, dad’s friend did just that. With customers coming in for gas, he returned, lowered the lift, dumped oil in the car, and it went down the shop center drain. The customer picked up his car and didn’t stop until the engine did. He ended up buying the car… which wasn’t worth much with a blown engine. (All because he forgot to check the dip stick.)

Today’s cars would warn about no oil pressure, but, yes, other things can go wrong. Like the time one of my wheels passed me, blocks from getting new tires installed. It bounced off a curb, away from a couple pushing a baby stroller. It could have been much worse than the minor damage to my car.

1960’s cars would too.

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Cars in the 50’s were often from the 50’s and older. I assume the
owner ignored the oil pressure meter, if it had one.

Well, speaking as a shop manager and former shop owner, I can say we generally eat the cost of a “comeback”. But first, let’s distinguish the 3 types of faulty jobs:

First and most common is a part failure–where we did everything right but the water pump or alternator or whatever failed during the warranty period. We eat the cost of the labor, and the part is covered under warranty from our supplier. In certain cases, the supplier may also reimburse us for part of our labor.

Second is installer error–where the parts are not at fault but the mechanic didn’t properly tighten a bolt or use the correct procedure to install a part. In that case the shop eats the cost of the repair completely. Like leaving an oil filter loose and ruining an engine.

Third is customer fraud. Like when you install a battery and 2 months later the customer wants the battery replaced under warranty but the serial# does not match the invoice. I once installed a set of tires on a car with expensive custom wheels. 2 weeks later the guy is back, claiming I left a wheel loose and he lost it on the freeway. Wanted a new wheel and tire. I asked to see the wheel. He said he couldn’t find it, yet he handed me the 5 lug nuts I supposedly left loose. That one I walked away from and had the “customer” call my insurance agent directly, who obviously denied the claim.

Remember, the mechanics working on your car are people just like you are. I don’t care what you do for a living, at some point in the course of doing your job you are going to make a mistake. The true measure of a shop is not whether they ever make a mistake, it’s how they handle it when it inevitably happens.


Would you speculate @asemaster that the majority of inde shops simply self-insure (as you do) rather than purchase insurance for installer errors (of the type that don’t cause injuries) then?

Absolutely not. A shop doing business without having a $1 million dollar general insurance policy is madness. The only question is knowing when to file a claim.

I once had an employee drop something down a spark plug hole when doing a tune-up. Caused engine block damage. I didn’t file a claim for that, just bought a good used engine and installed it. Even paid the tech to do it. Just a cost of doing business.


The garage keepers liability policy that I had for years was most heavily involved with personal injury resulting from work done at the shop, damage done to the car from negligence while at the shop and theft from the shop but had no direct coverage for correcting shop errors. Much like @asemaster I self insured and hoped that the supplier of the parts would pay for some of the labor but that was usually a wild dream and even getting a replacement part under warranty was a 50/50 proposition after 30 days regardless what the written warranty stated. Failed parts were returned to the supplier who supposedly ran a “scientific autopsy” on it and as a rule determined the problem was from some external cause. So in the vast majority of warranty returns I ate the cost. But on a ticket count basis I never had a year that returns reached 2%. Most of those were part failure. And for many reasons warranty returns are very costly to a shop.


At my employer’s shops our garage keepers liability policy had a deductible of $100,000, so we reserved that for catastrophic events and ate the cost of smaller, routine comebacks.

I can believe that. Some local shops and dealers will put on a customer supplied part (if it is from a reliable source) but the customer bears their own risk if the part fails. Local independents use NAPA because their parts are reliable and return is easier. (Per the shops I’ve talked with.) It’s money lost doing the same job twice, no matter the part payback.