Differences between Garage Liability Insurance and Garagekeeper's Insurance
The difference between Garage Liability coverage and Garagekeepers coverage is the difference between liability insurance and physical damage insurance. The first covers the insured's liability for operations and autos and the other covers damage to customer's vehicles. All garage risks need both coverages to properly insure their loss exposures.
A typical garage business has an auto exposure (owned, non-owned and hired) as well as premises/operations, contractual and products/completed operations exposures. Rather than writing two separate policies, the Garage policy allows you to combine the coverages into one Policy. Garage Policy is a combination Business Auto Coverage form and a Commercial General Liability Coverage form.
Garage liability insurance is an absolute necessity for the owner of a car dealership, a local mechanic, a tire dealer or a company doing oil changes. These policies are for employers who make a living working on cars. These programs are also for companies installing stereos or satellite radios.
Do not make the mistake with the assumption believing Garage Liability Insurance would cover the loss of a customer's auto while in your care. A separate Garagekeeper's policy or addendum to the garage (service center) policy already in place must be in place. Under the Garagekeeper's coverage, there are two options for the auto service operator to consider. One is called direct excess coverage that pays up to the value of the destroyed vehicle above the owner's coverage, and the other is direct primary coverage in which the service owner's carrier shares the loss with the car owner's insurer. When looking at your coverage it is critical to have an Agent who can outline your coverage needs and assist you in having the proper coverage to protect your business.
If you have a repair center that has a fleet of tow trucks or dispatched repair vehicles, those assets are covered under Garage Liability Insurance. However, the customer cars sitting outside waiting for service, or inside on that lift are not covered and this is the reason why you need the keeper clause for your protection. Please note that most Garagekeeper's Policies excludes loss to non-factory installed sound equipment, CDs, tapes, radar detection gear, phones or any other form of electronic possession.
Garage Liability Insurance providers may become extremely discriminatory regarding the requirements for getting the insurance, such as strict loss prevention or risk management efforts by the auto service owner. To cut costs and keep premiums lower, indemnity companies are often refusing to underwrite such things as wind and hail damage for company and customer vehicles. And tolerance by insurers for multiple incidents at a garage is limited.
Make sure every employee and officer of the company is on the policy. Coverage is usually only afforded to the locations and drivers listed on the coverage. Employees that get a DUI or go over their point allowances may be excluded from driving privileges and non-company drivers need to be discussed with the agent.
Getting and keeping garage liability insurance can be daunting. A number of things can be done to make an insurer want to indemnify one's business. Proper night lighting, well landscaped grounds, well maintained signage and windows as well as a freshly painted exterior as well as clean floors and bathrooms inside can make or break a policy being approved. The details of coverage are listed in the following pages.
GARAGE LIABILITY (details)
Section II of the Garage form covers two liability exposures: "Garage Operations" - Other Than Covered "Autos" (CGL exposures) and "Garage Operations" - Covered "Autos" (Auto exposure) for "bodily injury" and "property damage"(both exposures), and "covered pollution cost or expense" (auto exposure only). The policy defines "garage operations" as the ownership, maintenance or use of locations for garage business and that portion of the roads or other accesses that adjoin these locations. It includes the ownership, maintenance or use of covered autos (designated by coverage symbols) and all operations "necessary or incidental" to a garage business.
"Auto" is defined as a land motor vehicle, trailer or semitrailer and does not have to be designed for use on public roads. The Garage policy definition of "auto" is very broad and is determined by the selection of a coverage designation symbol. The Garage form also adds two additional coverages for exposures which are unique to garage operations. The first covers any customer's auto left with the named insured for service, repair, storage or safekeeping. The second covers dealers "autos" and "autos" held for sale by non-dealers or trailer dealers. This is used for physical damage coverage. Since the liability coverage part covers both CGL-type exposures and auto-type exposures, the policy includes two definitions of "who is an insured".
"Insureds" for covered autos include the named insured, permissive users, and anyone liable
for the acts of an insured. "Insureds" do not include the owner of a borrowed or hired auto, employees while using employee owned vehicles, someone working in an auto business, dealer's customers (unless they have no available insurance) or a partner while using a vehicle owned by the partner. "Insureds" for the garage operations other than autos include the named insured, and the named insured's partners, employees, directors or shareholders while acting within the scope of their duties.
Excluded from coverage would be: expected or intended injury; contractual liability (except "insured contracts"); workers compensation; employee indemnification and employer's liability; fellow employee; care, custody or control; leased autos (except autos rented to customers when servicing their vehicles); pollution; racing; watercraft or aircraft; defective products; work you performed; loss of use; products recall; war; and liquor liability. Note "personal injury" or "advertising injury" coverages would have to be added by endorsement.
The garage operations coverage - other than autos is subject to an accident limit and an annual policy aggregate limit. There is not a separate products/completed operations aggregate. Because the garage liability coverage is not as broad as the CGL policy, it is recommended that the Broadened Coverage - Garages endorsement (CA 25 14) be added. This endorsement adds coverage for: personal and advertising injury; host liquor liability; fire legal liability; incidental medical malpractice; non-owned watercraft; spouses as insureds; coverage for newly acquired garage businesses (90 days); and limited worldwide liability coverage. When added, these coverages become subject to the policy aggregate.
"Covered pollution cost or expense" would cover "bodily injury" or "property damage" caused by the leakage of fuels, lubricants, fluids, exhaust gases or other similar pollutants that are "needed for or result from the normal electrical, hydraulic or mechanical functioning" of the covered auto if the pollutants are released from an auto part designed to hold, store, receive or dispose of the pollutants. Also covered would be third party liability if an insured causes another vehicle to discharge pollutants as the result of an accident. The policy does exclude damage caused by pollutants which are being transported by the insured or are being stored in the covered auto. The other exclusions which apply to garage operations also apply to the auto exposure. The auto coverage is subject to an accident limit which is separate from the garage operations accident limit. The auto liability coverage is not subject to the aggregate.
GARAGEKEEPERS COVERAGE (details)
Garagekeepers coverage provides protection for damage to customer's vehicles due to the insured's legal liability. Coverage options are comprehensive (anything other than collision or overturn), specified causes of loss (fire, lightning, or explosion; theft; or mischief or vandalism) and collision or overturn. This coverage is needed because of the "care, custody or control" exclusion in the liability section of the policy. It covers the insured's "bailees" exposure. Because the basic policy coverage is based on the "legal liability" of the insured for damage to customer's vehicles, the customer must prove that the insured was negligent for the damages. This can create a loss of goodwill if coverage is denied because it is determined that the insured is not negligent for the damage.
For this reason, two direct coverage options are available: direct excess and direct primary. Both coverages apply without regard to liability. With direct excess, coverage applies in excess of the vehicle owner's coverage. With direct primary, the garage insured would share the loss with the auto owner's insurer.
With Garagekeepers coverage, the insured must select a limit for each location. The exact limit needed can be difficult to determine. One way to determine the limit is to consider the average value of the vehicles in the insured's care times the average number of vehicles in the insured's care at a given time.
There is no "coinsurance-type" penalty for underinsurance, but care should be used in the selection of the limit because a catastrophic total loss (like a tornado) could leave the insured without adequate coverage. Because Garagekeepers coverage is physical damage coverage, deductibles apply to covered losses.
For comprehensive or specified causes of loss coverages, loss by theft or by vandalism or malicious mischief is subject to a deductible for each auto and is also subject to a maximum deductible for all such loss in one event. The collision deductible applies to each auto, regardless of the number of autos involved in the collision loss. The maximum limit would be the location limit.
Garagekeepers coverage is subject to several exclusions. Excluded are: contractual obligations; theft by an insured; defective parts; faulty work; loss to sound reproducing equipment (unless permanently installed); loss to tapes, records, etc.; loss to other sound receiving equipment (CB's, mobile radios, telephones or scanning monitors unless installed in the dash or console) and radar detection equipment.