Mechanic Insurance Cost Guide (2026)

Being an auto mechanic isn’t just about fixing engines, it’s about managing risk. Whether you operate a one-person workshop or run a multi-bay service centre, the right insurance protects you, your business, your customers and your livelihood. This guide explains what types of insurance a mechanic typically needs in Australia, how much it costs in 2026, and what drives those costs.

What Insurance Does a Mechanic Need?

Here are the core policies mechanics generally consider:

1. Public Liability Insurance

Public Liability insurance is designed to provide protection for you and your business in the event a customer, supplier or a member of the public brings a claim against you due to their being injured or sustaining property damage as a result of your negligent business activities.

Examples of claims:

• A customer slips on an oil slick in your workshop.
• A car you serviced rolls off the hoist and damages the customer’s garage.

Typical covers: $5M – $20M
 Why it matters: Often required by landlords, councils, and even some suppliers.

2. Tools & Equipment Insurance

Portable Equipment insurance (also known as Tools & Equipment insurance or General Property insurance) covers you for loss and damage to items of portable equipment associated with your business. These can include tools of trade and items of stock.

Typical claims:

• Toolboxes stolen from a van overnight.
• Diagnostic equipment damaged after a power surge.

3. Business Interruption Insurance

Business interruption provides cover for the loss of income and increased costs of operating your business caused by a specified insured event (such as property damage or fire). It’s designed to assist your business to recover from an insured event by paying ongoing expenses (such as wages or rent). It is sold as part of a Business Insurance Pack (sometimes also called a BizPack).

4. Workers’ Compensation (mandatory)

Workers’ Compensation insurance is generally required by law in Australia if you employ staff. It helps cover medical expenses and a portion of lost wages if an employee is injured or becomes ill because of their work.

Note: Each state and territory has different schemes and premium rates.

BizCover does not offer Workers’ Compensation insurance through its platform.

5. Other types of insurance

• Professional Indemnity insurance: Covers you for losses claimed by a third party & defence costs due to alleged or actual negligence in your professional services or advice. This includes defence costs cover.
• Cyber Liability insurance: Covers losses from claims arising from data breaches, business interruption and remediation costs following an actual or threatened data breach. You may wish to consider Cyber Liability insurance if you take online payments, have a website, or use a smart device to run your business.
• Income protection (for sole traders): Personal Accident and Illness insurance provides a weekly income benefit following an accidental injury or illness once signed off from work by a medical practitioner for a set amount of time.

Mechanic Insurance Cost Ranges (2026)

On average, mechanics are paying around:

• Business Pack: $4,422 per year
• Personal Accident: $2,885 per year

*BizCover Customer Average Payment Report is based on 1 July 2024 to 30 June 2025 and presented as a guide only. It may not reflect pricing for your particular business, as individual criteria will apply.  

3. What Affects the Cost of Your Insurance?

Several factors can influence how much you’ll pay for cover. Insurers typically consider:

• Business size & payroll: The more staff you have, the higher your exposure to liability and workers’ compensation claims.
• Turnover: Higher revenue can mean more work, which can increase the likelihood of claims.
• Location: Workshops in busy or urban areas may face higher premiums due to increased risks like theft or public interaction.
• Claims history: If you’ve made claims in the past, insurers may see you as a higher risk.
• Type of work you do: Specialised services (like transmission work or panel beating) can carry different risks compared to general servicing.
• Vehicle fleet: The age, value, and type of vehicles you use for work can affect your commercial motor insurance costs.

4. Real Claims Examples (Mechanics)

The owner of a specialist mechanical workshop faced a claim against the business – after the employee who had performed the work had left.

The worker had carried out a number of mechanical procedures on a client’s care, including the servicing of the automatic gearbox. Servicing of gearbox included the removal and replacement of the lubricating automatic transmission fluid. Following the repairs by the insured business the vehicle was given back to the client. However, the client returned not too long after, complaining that the gearbox was failing to select gears correctly.

As the owner of the business held Public Liability insurance, they made a claim with their insurer.

The insurer appointed a loss adjustor, who determined that the employee who had worked on the vehicle – who, by this time, no longer worked at the business – had used the incorrect lubricating oil.

In the end, as the owner of the business was covered by Public Liability insurance, the insurer paid a total of $10,000 for damages and loss adjustor fees.

5. How to Lower Premiums

Here are some general tips on how mechanics can help to try and lower their insurance premiums without actually reducing their cover:

• Maintain a clean claims history
• Install CCTV, alarms & secure fencing
• Bundle policies (e.g., liability + tools + motor)
• Review coverage annually

6. Get Covered in Minutes

At BizCover, you can compare multiple insurers tailored to:

• Your workshop size
• Your turnover
• Your state & services

Start a quick quote and get covered today.