There are so many different types of businesses in the Automotive Aftermarket industry. Some examples are Auto Repair shops, towing companies, collision/body shops, and Oil/Lube Shops, not to mention franchised auto dealers as well as independent auto dealers. All of these, and many more, require business insurance, such as General Liability Insurance and Property Insurance. But, unlike other businesses, these businesses are often handling their customer’s vehicles, which requires special coverage. Garage Keepers Insurance is one special coverage needed by an automotive service company.
What is Garage Keepers Insurance?
Garage keepers’ liability insurance offers automotive business owners’ coverage for the vehicles owned by their clients when they are left with them for repairs or service. Depending on the policy, garage keepers’ insurance may cover several types of vehicles including cars, vans, and trucks as well a trailer. Other operations that might require this important coverage are valet services, windshield installers, & carwashes. It is important to note that garage keepers’ coverage may not extend to vehicles being road tested for appraisal or demonstrated for sale. It is not a policy coverage “customers goods” like some forms of bailee insurance.
This coverage may be referred to as “storage location insurance” in some states. These policies generally coverage the customers vehicles against collision, fire, vandalism, and theft.
Types of Garage Keepers Coverages
As each type of business offers different services, and may require different types of coverages, it is important to carefully choose the right coverage based on your business’ need and types of risk it carriers. Here are some of the coverage options offered:
Direct Primary Coverage
This important coverage makes sure the customer’s vehicle is covered no matter who is at fault for damages to the vehicle. As a garage owner, you would assume total liability for all vehicles your customers leave with you for service. For example, if your customers car is stolen while in your care, direct primary coverage would pay for the loss, even though you are not directly responsible for the theft. Your customer would not need to file a claim with their insurance.
Legal Liability would pay for losses if, for example, one of your employees was legally responsible for the damage to your customer’s car, regardless of how they cause the damage. For example, if one of your mechanics got into a car accident during a test drive after having done repairs on the vehicle. Legal liability coverage would pay for the resulting damage.
Although this coverage is like Direct Primary Coverage, it is less common. The main difference between the two coverages is that if you are not responsible for the damage, Direct Excess Coverage would only pay over any amount that can be collected under the customer’s owner’s auto policy. As an example, say a fire destroys both the client’s car and your building and the client has comprehensive coverage. That coverage would pay for damages to the vehicle. After that coverage limit is reached, Direct Excess would help cover any remaining damages.
What Garage Keepers Insurance does not cover?
Any Auto service shop owner will confirm that Garage Keeper’s Insurance is vital to protecting their businesses from possible claims. There are some coverages that are not covered under this policy, such as:
- Defective vehicle parts
- Faulty workmanship
- Theft of vehicles by the insured
- Contractual obligations with a dealer
- Employee Dishonesty
- Radar detectors
- Loss of non-permanently installed stereo equipment
- Personal belongings customers leave inside their vehicles
What does Garage Keepers Liability Insurance Cost?
Just like any other insurance policy or coverage, the cost depends on many different factors, such as:
- The location of the business
- The types of vehicles being serviced
- The average number of vehicles being serviced daily
If you have questions about Garage Keepers’ Insurance or are not sure if you are properly covered by your current business insurance policy, contact the professionals at Arrowhead Automotive Insurance. We are a leading national insurance agency providing products and services to businesses operating in the automotive industry. Our team is dedicated to this industry and has the unique experience and knowledge to thoroughly evaluate the needs of your business. Our influential relationships with top insurance companies and industry organizations allow our agency to provide unrivaled, personalized solutions.