Garage Liability or Garagekeepers? Part 2

In Part 1 of this two-part series about Garage liability vs. Garagekeepers coverages, we took at look at the difference between the two as well as a deeper dive into Garage Liability.

In Part 2 of this series, we’re going flip the switch and take a closer look at Garagekeepers.

While 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 or installing stereos or satellite radios, these policies are primarily for business operations, and operations ONLY. Garagekeepers covers damage that occurs to the customer’s vehicles while in your client’s care.

For example, if your client owns a repair center with a fleet of tow trucks, those assets are covered under Garage Liability Insurance. However, the customer cars sitting on the tow truck, outside the garage waiting for service, or inside on a lift, are not covered. This is where Garagekeepers comes into play.

This coverage would be a separate policy or addendum that accompanies an existing Garage Liability coverage, and is equally as important.

Garagekeepers coverage offers three options:

  1. Legal Liability.This is the most common. The protection applies to a customer’s vehicle damaged due to the insured’s negligence – such as the mechanic wrecked the customer’s car while test driving it or the customer’s vehicle was left unlocked and unattended after hours. In other words, the insured has to be legally liable.
  1. Direct Primary.This form covers the customer’s vehicles regardless of liability. In a loss caused by no action of the insured such as weather or theft, although the vehicle was adequately protected, the garage insured would share the loss with the auto owner’s insurer. 
  1. Direct Excess.This form affords protection to an insured for the loss to a customer’s vehicle regardless of liability, just as direct primary does. The difference is, in the event of the insured having no liability, coverage applies in excess of the vehicle owner’s coverage

Some caveats that are important to help your clients understand:

  • Every employee and officer of a company should be on the policy. Coverage is usually only afforded to the locations and drivers listed on the coverage.
  • The insured must select a limit for each location. Because exact limit needed can be difficult to determine, it can be helpful 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.
  • Garagekeepers coverage is subject to several exclusions, including, but not limited to: 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.

Hopefully, this series has shed more light on Garage Liability and Garagekeepers. In a nutshell, the difference between the two is: Garage Liability covers the insured’s liability for operations and autos while Garagekeepers covers damage to the customer’s vehicles. All garage risks need both coverages to properly insure their loss exposures.

For clarifications on anything else or to receive a quote, give us a call at 800.385.9978

or send a message to info@uigusa.com. We’re here to help!