A vehicle is taken to your local repair shop and the mechanic then takes it out for a test drive around Orlando . While driving around the corner, the mechanic losses control of the client's vehicles and hits another car that is parked on the side of the road. How is the repair shop's Insurance Policy going to respond the damages the mechanic caused? Well the shop may have a Garage Liability Policy that will cover the damages to the parked vehicle, and it will cover the client's vehicle under the Garage Keepers Coverage of the policy.
Garage Policies include primarily 2 sections. The Garage Liability section that covers Bodily Injuries and Property damages of others, and Garage Keepers section (optional) that covers the client's vehicle.
Liability Section Coverage
Garage Liability form is broken into two parts: garage operations other than covered autos, and garage operations covered autos.The purpose of this part is to cover bodily injury or property damage caused by an accident arising out of garage operations. The policy defines garage operations as the ownership, maintenance or use of locations for garage business. It also includes the ownership, maintenance or use of the autos. The types of autos covered for an auto dealer are typically for all owned autos. On the contrary, in the repair/body shop business non-owned autos are the vehicles covered (normally vehicles being worked on or stored).
The Garage Liability policy gives broad definition of an "auto". The policy states, “Auto means a land motor vehicle, trailer or semi-trailer.” In this definition, there’s no reference to the auto being licensed for use on public roads, no reference to its number of wheels, mobile equipment or anything else.
Garage Keepers Section Coverage
Garage Keepers is an optional Coverage that protects repair shop businesses for losses to a customer’s auto left in the insured’s care, custody or control. The policy clarifies that by saying, “while the insured is attending, servicing, repairing, parking or storing it in your garage operations.”
Garage Keepers 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.
2. Direct Primary. This form covers the customer’s vehicles regardless of negligence. In a loss caused by no action of the insured such as a weather loss, or a theft although the vehicle was adequately protected, the direct primary garage keepers pays.
3. Direct Excess. Is the least common option, but it’s the best. The form offers 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, the form will only pay in excess of any other collectible insurance.
In conclusion, it is important to have your agent review your policy. Make sure you have enough Garage Liability to cover any damages or injuries you may cause to others. Also, make sure that you have the adequate protection to cover your client's vehicles while they are being repaired or stored at your shop by purchasing Garage Keepers coverage with your policy.
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