The truth about Workers’ Comp Insurance for Auto Businesses

workers’ comp coverage for auto employees
Mordechai Kamenetsky
Last Updated: 
March 20, 2023

Every state has rules regulating workers’ compensation insurance. Regardless of your business location, states require most industries to insure their employees. 

Requirements are often based on the number of employees a business has and the number of hours those employees work. 

Still, it’s unlikely that anyone in the auto industry will be exempt from carrying workers' comp insurance for auto businesses.

Are you purchasing auto mechanic workers' comp for the first time? Have you been paying premiums for a while but don’t fully understand what goes on behind the scenes? 

Keep reading to see how companies determine rates and why workers’ compensation is necessary.

Why you need Workers’ Compensation Insurance

Workers’ compensation insurance for automotive businesses replaces lost wages and covers medical expenses for employees who become ill or get injured during the course of performing their job duties. 

Different jobs present different levels of risk and likelihood of injury. Having insurance is an excellent way to protect your employees. 

As mentioned above, there are also guidelines in each individual state governing workers’ comp insurance requirements. 

There are plenty of reasons to comply with those guidelines, such as:

Employee protection

Employee protection

Workers’ comp insurance for auto businesses is particularly important. Employees in the industry are frequently exposed to unique hazards.

Eye injuries, chemical burns, sprains, and falls are a few of the common injuries in the auto industry. An injury could put an excellent employee out of work temporarily or permanently, which would be a great loss for the worker and the shop. 

Workers’ compensation helps employees get the medical care and recovery time they need to rejoin the workforce.

Fines and penalties

Fines and penalties

Don’t trifle with the guidelines and requirements for workers’ comp. 

Failure to carry workers' comp insurance for auto businesses and follow state laws can result in everything from fines, which accumulate quickly, to large penalties and Stop Work Orders. 



How many auto businesses could survive a lawsuit? Even if your business could weather it, carrying proper insurance is simpler and likely less expensive. 

How are rates determined?

Understandably, costs are a concern when purchasing any kind of insurance. Insurance premiums represent a sizable chunk of monthly or annual expense, so it’s best to know what to expect and have a grasp on where those numbers come from. 

There’s a lot that goes into determining the correct rates for workers' comp insurance for auto businesses. Most of the information comes from the employer or business owner. 

For the correct coverage, information about job duties and the business needs to be accurate and precise. 

Insurance companies determine rates with a combination of payroll information and class codes. 

Insurance companies use class codes to classify the type of job performed and identify the level of risk that goes along with that job. “Risk” can include the workplace hazards standard to that position and the likelihood of an employee suffering an injury. 

The National Council on Compensation Insurance (NCCI) determines class codes. Codes are not set by insurance companies.

Class codes have variations between states, too. Certain states have more class codes than others. 

For example, Massachusetts has 800 class codes while Florida has 600, currently. 

When you’re applying for or renewing workers' comp insurance for auto businesses, it’s important that you look up the regulations and codes for your specific state and work with an expert insurance provider. 

Tips for lowering Premiums 

Workers’ compensation is a necessity, but you don’t have to suffer under high premiums. High-risk positions like auto mechanics come with a larger price tag than clerical workers, but options are available. 

Get the most accurate rates possible by: 

Class codes

Class Codes

Class codes or comp codes are critical to accurate coverage.
Classify your employees correctly. Ask questions if necessary.

Businesses are usually held financially responsible for any differences or misinformation. The risk isn’t worth it.

Workers’ comp insurance costs more for a mechanic than a salesperson, but dishonesty won’t save you anything in the long run! 

reporting claim

Reporting Claims

Initiate the claims process immediately for any sick or injured employee. Reporting responsibilities vary from state to state. In some locations, employers file claims. In others, employees are responsible for starting the process.

Make all relevant workers’ compensation information available to your employees. The steps and information should be clear and accessible. Display it according to your state’s guidelines. 

workplace safety

Workplace Safety

Check into programs for workplace and health safety

If your state has safety training available, train your employees. Certain programs may award grants for completion. 

You’ll have healthier, better-trained employees and save money on your workers' comp insurance for auto businesses. 

What does that mean for Auto Businesses? 

Depending on the type of business, codes will vary. 

A mechanic workers comp code won’t be the same as the code for detailers, for instance, because the positions don’t carry the same types of risk. 

With most businesses, employees perform different types of work, meaning insurance companies factor in multiple class codes. 

Below is a breakdown of some of the common class codes used in workers comp rating for auto mechanics, workers comp insurance for auto dealers, and other similar businesses. 

  • 7225 workers’ comp code - Use this classification for employees in automobile towing or working as drivers.
  • 8002 workers’ comp code - Automobile rental companies typically use this code as long as the employee has no additional duties. 
  • 8046 workers’ comp code - Classify store employees under this code. It applies to workers in stores selling automobile parts and accessories. 
  • 8380 workers’ comp code - This is the code for mechanics. It’s officially called “Automobile Service or Repair Center” and employees working as auto mechanics fall under this comp code. Mobile mechanics qualify as 8380 workers, too. 
  • 8393 workers’ comp code - This is the designation for body shop employees. Collision repair often falls under this code as well. If the repair work or bodywork is outside of that scope, it’s classified differently. 
  • 8748 workers’ comp code - Use this code for salespersons that do not perform delivery. It is specific to salesmen only doing sales work. 
  • 9505 workers’ comp code - This is the code for “Painting: Automobile or Carriage Bodies” and covers sanding, painting, and related duties. It may include minor dent repair or similar steps before painting but not major repair or mechanical work. 
  • 7225 workers’ comp code - List towing employees under the 7225 code unless they perform an additional higher-risk job. 
  • 8810 workers’ comp code - Clerical employees qualify for this code. Many auto businesses have clerical employees in addition to other workers and this is a commonly used comp code. 
  • 9014 workers’ comp code - This designates employees working in car detailing and cleaning (with minimum repair work). 

Additional Information

If an employee has more than one job or list of duties, classify them under the highest risk code. 

For example, if someone is a mechanic that also performs clerical duties you rate them under the work comp class code 8380 for mechanics. 

Remember, class codes vary slightly from state to state.

 The exact definitions depend on where you live and purchase your insurance, and they should be accurate on workers' comp insurance for auto businesses policies. 

Workers’ comp for auto businesses

Common insurance struggles for Auto Businesses 

Auto businesses face a unique set of hazards and insurance companies consider several positions to be “high risk”. 

Workers’ comp insurance for car mechanics involves covering hazards like moving heavy equipment, using tools, cutting, and several other tasks that injure or impair employees. 

There are insurance companies unwilling or hesitant to cover businesses that offer towing and roadside assistance for similar reasons. Underwriters balk at the risk involved. 

Certain underwriters also ask for more information even when class codes don’t change. 

For example, if a repair or towing business works on large vehicles (RVs, big trucks, etc) insurance companies sometimes hesitate to offer coverage. The risk is higher, even though the comp code is the same. 

If you’re having a hard time obtaining workers' comp insurance for auto businesses, it’s still important to accurately report everything on your applications. 

Any audit will find the discrepancies! 

Keep your payroll information and classifications as correct as possible and keep diligent records. It’s a worthy investment to save yourself a future headache. 

What’s the solution? 

If you’re struggling to get workers' compensation insurance for auto dealers, auto repair services, towing, or similar auto businesses, find an insurance provider willing to work with the risks. 

Kickstand Insurance works with auto businesses that other insurance companies turn away. 

Do you do towing and roadside assistance? No worries! The underwriters with Kickstand Insurance won’t automatically disqualify you from workers' comp insurance for auto businesses. 

It’s important, necessary work. The businesses and employees performing it deserve reliable workers’ comp insurance. 

Your search for the best workers' comp insurance for a small business ends here. 

Kickstand Insurance offers instant quotes online so you’ll know just what to expect. 

Expert guides assist you through the process and get the coverage you need to protect yourself and your employees, and certificates arrive in as little as 24 hours after purchasing the policy. 

Kickstand Insurance gives you the protection and coverage you need - without the wait.

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Note: The information provided in this blog is intended for general informational purposes only and is not a substitute for professional legal or insurance advice. Laws and regulations regarding workers' compensation insurance are complex and vary by state and by specific circumstances. Therefore, readers are encouraged to consult with a qualified legal or insurance professional to obtain advice with respect to any particular issue or problem they might have.

Mordechai Kamenetsky

Mordechai Kamenetsky, co-founder and lead agent of Kickstand, is recognized as an expert in workers' compensation. He is passionate about helping small businesses manage risks and lower their workers' comp costs. In his articles, he educates readers and clients on the intricacies of workers' comp insurance.

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