Garage liability and Garagekeepers. What’s the difference?
What is garage insurance? What types of businesses need it? And what’s the different between garage liability and garagekeepers? Read on to find out exactly which coverages are the best fit for your next auto-related risk and be able to explain to them which coverages are needed and not needed.
Garage insurance is a commercial auto policy designed to address the needs of auto dealers and repair services and/or those that have care, custody and control on non-owned autos. Garage liability covers both premises liability and auto liability. It’s essentially a combo of a business auto policy and general liability. The policy could also include Dealers Open Lot and/or garagekeepers, based on the company’s operations and needs.
Let’s say a mechanic at a body shop takes a customer’s car out for a test drive, and ends up causing an accident. The auto liability portion of the policy will cover any damage to a 3rd party car or property. What about the customer’s car that the mechanic was driving? Since garage liability only covers damage to third party cars, the shop would need to have garagekeepers coverage.
Because the policy has carefully excluded non-owned vehicles in the “care, custody or control” of the insured, in order to cover any damage to the car, the shop would need to have a garagekeepers policy.
Who needs garage liability?
Auto Dealers: Used car dealers who sell private passenger type units, motorcycles, heavy trucks and trailers, recreational vehicles. These can be either retail or wholesale and may include consigned autos.
Repair Shops: Transmission shops, paint and body shops, vehicle wraps, antique/classic auto restoration, ATV repair, auto glass installation or repair, oil/lube operations, tire sales or installation.
Other types: Valet parking risk, storage garage risk, salvage yards, full service car wash, roadside assistance service, wrecker service.
Garage Liability provides comprehensive coverage for premises liability, and auto liability coverage. For coverage to apply the loss must occur at the schedule location but there’s an exception for risks that are stated as mobile operations, such as a mobile mechanic, where most of the work is performed on the road and a schedule location might not exist.
Auto Dealers may want to add on dealer’s open lot (DOL) coverage to their garage policy. This is designed to provide physical damage coverage for the insured’s owned vehicles held for sale. This could include damages resulting from customers test driving vehicles, theft, or damage from weather events such as hail, depending on coverage type.
Garagekeepers coverage provides physical damage coverage for non-owned autos in the care, custody and control of the insured. This is an optional coverage designed for business owners who offer repair services, towing services, valet services or that operate service stations. This protects the customer’s vehicle while being kept at the insured’s location while parked, stored or while services are being performed.
There are three options to choose from with garagekeepers coverage:
Legal Liability – this type pays only when the insured is legally responsible for the loss
Excess – this type will kick in after the insurance carried by the customer is exhausted
Direct Primary – this type pays for the loss whether you are legally obliged to do so or not
You can help your insured decide which is right for them based on their risk history, where they’re located and what type of operation they’re running.
Who needs garagekeepers?
While it’s not legally required, it’s a good idea for repair shops, towing services, valet services and any other business handling or storing a customer’s car. If a customer’s care is damaged in the insured’s care, do they want to pay for it out of pocket or let insurance pay? Or worse, do they want to tell the customer they aren’t obligated to fix their mistake, and end up with angry customers and a bad reputation?
Got more questions about these and other transportation coverages? Give us a call. A Myron Steves Transportation Underwriter will review your risk and explain which coverages and limits are appropriate for your risk so you can advise your client on their options. Learn moreabout garage insurance with Myron Steves.