Locksmith Business Insurance

Business insurance helps you keep your business running by covering legal expenses, professional mistakes, and client disputes.

Why Do Locksmith Businesses Need Insurance?

Locksmith businesses need insurance to cover the inherent risks associated with their job including safety hazards, property damage, legal liabilities, and of course maintaining client trust.

For starters, many locksmiths work with mobile services meaning they come to the property or the vehicle in question using a company car and that car is often full of equipment for basic services. This means that employees face inherent risks by working in unique and often dangerous settings.

Without the right insurance, locksmith companies can be on the hook for significant losses if there is an accident or other damage and might be financially responsible for any damages resulting from a lawsuit.

Then you add the risk of liability like property damage to your vehicles or customer’s property, even claims of things like theft from the home after a locksmith works on a residential or commercial property. General liability insurance can provide protection for a locksmith company against claims of property damage, bodily injury, or even lawsuits.

It also adds credibility—many customers and clients require proof of insurance before hiring a locksmith and some states and counties require things like basic insurance or surety bonds. If you’re an independent contractor, or you have a business with several contractors under your employ, having the right insurance helps you operate confidently, knowing you’re covered if something goes wrong.

What Insurance Do Locksmith Companies Need?

Running a locksmith operation involves specific risks, ranging from road accidents to damaging a client’s security system. You need the right coverage to handle potential lawsuits, medical bills, or equipment replacement. Here are the primary types of business insurance policies locksmiths should review to stay protected.

Workers’ Compensation Insurance

If you have staff members, most states require you to hold this policy. It protects your team if they get hurt or sick while performing their duties. The coverage pays for medical treatment, physical therapy, and lost income while they recover.

Example: An employee slices their hand deeply while cutting a key and requires stitches. Workers’ compensation pays for the urgent care visit and their wages while they heal.

Commercial Auto Insurance

Personal car insurance policies rarely cover accidents that happen during work tasks. Since locksmiths are often mobile, commercial auto insurance is vital. It covers liability and damage if a company vehicle is involved in a crash.

Example: You slide on ice while driving the company van to a lockout call and hit a parked car. This policy pays for the damage to the other vehicle.

General Liability Insurance

This is usually the first policy a business buys. It covers third-party bodily injury and property damage claims. If your work accidentally hurts a bystander or breaks something that belongs to a client, this policy handles the legal fees and settlement costs.

Example: While installing a deadbolt, your drill slips and gouges a customized, expensive door. General liability covers the cost to repair or replace the door.

Business Owner’s Policy (BOP)

A BOP is a cost-effective way to get broad coverage. It combines general liability and commercial property insurance into a single package. This is often cheaper than purchasing the two policies separately.

Example: A pipe bursts in your shop, damaging the floor and your inventory. A BOP helps cover the repairs and the loss of business income.

Inland Marine Insurance

Mobile locksmiths rely heavily on their tools. This policy protects your equipment while it is in transit or at a job site. Standard property insurance covers tools at your main office, but Inland Marine insurance covers them everywhere else. The average cost for a locksmith is around $23 per month.

Example: Someone breaks into your work van while you are inside a client’s home and steals your key coding machine. This policy pays to replace the stolen equipment.

Professional Liability Insurance (Errors & Omissions)

General liability covers accidents, but professional liability covers mistakes in your craftsmanship or advice. If a client claims your work was negligent or caused them a financial loss, this policy provides a defense. The average cost is roughly $42 per month.

Example: You install a high-security electronic lock but fail to configure the software correctly. A burglar bypasses it easily. The client sues you for the loss. This insurance helps cover the legal claim.

Hired And Non-Owned Auto (HNOA) Insurance

Sometimes employees use their own cars to run errands or get to job sites. If they cause an accident in their personal vehicle while working for you, your business could be sued. HNOA provides liability coverage for these specific situations.

Example: You ask an employee to drop off paperwork at the bank in their own sedan. They cause a minor collision on the way. HNOA covers the liability damages.

Commercial Property Insurance

This policy is essential if you own or rent a physical shop. It protects the building itself and the assets inside against risks like fire, theft, or severe weather.

Example: A thunderstorm breaks a window in your storefront, and water ruins your display cases. Commercial property insurance pays for the repairs.

Business Personal Property (BPP) Insurance

BPP focuses on the movable assets within your business premises. This includes your furniture, computers, stock of key blanks, and machinery. It pays to repair or replace these items if they are lost to a covered event like a fire or burglary.

Example: A thief breaks into your shop overnight and steals a laptop and several expensive safes. BPP helps you replace the inventory and electronics.

Employee Dishonesty Insurance

It is unpleasant to think about, but sometimes employees commit fraud or theft. Employee dishonesty coverage protects your business from financial loss caused by dishonest staff members.

Example: A technician collects cash payments from customers for a month but pockets the money instead of turning it in. This insurance reimburses the business for the stolen funds.

Cyber Liability Insurance

Modern locksmithing often involves digital data, including security codes and customer credit card numbers. If hackers breach your system, this policy covers the costs of notifying clients, legal fees, and credit monitoring services.

Example: Your billing computer is infected with malware, and client addresses and alarm codes are exposed. Cyber liability helps pay for the required notifications and legal fallout.

Umbrella Insurance

Standard policies have financial limits. Umbrella insurance provides an extra layer of coverage that kicks in when a claim exceeds those limits. It sits on top of your general liability or auto policies to prevent a massive lawsuit from bankrupting you.

Example: Your company van causes a massive multi-car accident with severe injuries. The lawsuit demands $1.5 million, but your auto policy limit is only $1 million. Umbrella insurance covers the remaining $500,000.

Cheapest Locksmith Professional Liability Insurance

The cheapest option for Professional Liability insurance is from Progressive, with an estimated annual cost of $755.

Note: These estimates are based on a locksmith business with under $100,000 in annual revenue, selecting a $1 million per-claim professional liability limit. Actual premiums will vary based on your chosen deductible, policy limits, and the exact nature of your services (e.g., auto vs. safe-cracking).

Cheapest Locksmith General Liability Insurance

The cheapest option for General Liability insurance is offered by Next, with policies starting at $505 per year.

Note: These estimates are based on a sole proprietor locksmith with low annual revenue and a standard $1 million per occurrence / $2 million aggregate general liability policy. Actual premiums will vary based on your state, claims history, and specific services.

Cheapest Locksmith Business Owner’s Policy

The cheapest option for a Business Owner’s Policy (BOP) is from NEXT, with an estimated annual cost of $570.

Note: These estimates are based on a small locksmith business bundling General Liability ($1M/$2M limits) with $25,000 in Commercial Property coverage for tools and a small office. Actual premiums will vary based on your property value, location, and revenue.

How Much Does Locksmith Business Insurance Cost?

Locksmiths pay an average of $44 per month for general liability insurance. Several factors influence the cost of business insurance coverage, including your business location, the number of employees, the types of services you offer, the records you keep, your claims history, and whether you transport expensive tools.

Insurers also consider the amount of coverage you choose and whether you package policies together. While it may be tempting to go with the cheapest option, it’s important to choose a plan that truly protects your business from its most likely risks.

Note: The estimates provided above are based on averages for a small locksmith business with a good claims history and standard policy limits (e.g., $1 million/$2 million general liability). Actual premiums will vary significantly based on several factors, including your business’s specific location, number of employees, annual revenue, services offered, vehicle types, and your chosen coverage limits and deductibles.

How Is Your Locksmith Business Insurance Cost Calculated?

Insurance providers review specific details about your operations to set your premium. One of the primary factors is the exact type of services you provide. If you run a mobile unit for emergency lockouts or handle complex commercial security, your price will likely be higher than a shop focused on residential keys.

Your total revenue also impacts the rate. When your business makes more money, you generally have more client interactions. This increases the chance of an accident occurring.

Location is another major component. Working in areas with high crime rates or severe weather risks often leads to higher premiums. Underwriters also assess where you drive your service vehicles. Navigating heavy city traffic is viewed as more dangerous than driving in quiet suburbs.

Finally, insurers look at your history. If you have filed claims in the past, you are viewed as a higher risk. They also consider the total value of your tools, whether you own your work vans, and your chosen coverage limits. Even your business structure, such as being an LLC, can change the final price.