Garagekeepers Coverage vs. Garage Liability Insurance

Have you considered the difference between garagekeepers coverage and garage liability insurance? While many may consider these policies the same thing, we are here to tell you that there IS a BIG difference. In order to consider your business to be properly covered with garage insurance, both policies are crucial to have.

So, what are the differences? The best way to understand is through an example.

Let’s assume an employee spills a flammable liquid or gasoline in the garage. A spark from an employee welding nearby ignites the liquid, burning a vehicle also in your garage. To make matters worse, a customer is injured vacating the building and a laptop and some golf clubs in the truck are burnt.

Garage liability insurance:

According to IRMI Online, garage liability insurance is defined as: “insurance covering the legal liability of franchised and non-franchised automobile, truck, truck-tractor, motorcycle, recreational vehicle, and trailer dealers for claims of bodily injury and property damage arising out of business operations.”

Therefore, it is the general liability policy that would respond to the claims associated with the injured customer. But what about the car and the contents?

The general liability policy excludes from coverage any personal property that is in your care, custody, or control. It does not matter whether this personal property is owned or used in a business.

Garagekeepers coverage:

This particular policy covers the legal liability for garage shops, dealers, repair shops, etc. While a customer’s vehicle is sitting in your shop, there is no telling what might happen to it. Garagekeepers coverage (unendorsed) protects the customer’s vehicle while you are keeping it on location for parking, storing or performing service. It will also provide protection for damages by fire, theft, collision or vandalism. But there is a catch. The garage keeper must have some degree of negligence associated with the claim.

Assume that in the above example it was lightning that ignited the fire. Since that is not the fault of the shop owner, generally they would not be liable for the loss and the policy would not pay even though the vehicle is in their care. While at first glance this may seem awful, in that the garage owner is perceived to fend for themselves, remember that the garage owner is not legally liable and therefore cannot be held liable in court.

But because the source of the fire in this example rests with the negligence of the employee due to the flammable liquid spill, the resulting damage to the vehicle is covered by the garagekeepers policy.

Okay, but what about the contents of the vehicle? The contents are not covered by the general liability because of the care, custody and control exclusion. It is also not covered by the garagekeepers policy because personal property is not a vehicle and that’s all that a garagekeepers policy covers; vehicles.
So where do we get coverage? Through an endorsement to the policy adding coverage for customers personal property in the care of the shop owner.

At Wolpert Insurance, we can provide your unique business with garagekeepers insurance, garage liability insurance and whatever other insurance needs your business requires. Just like an expensive designer suit needs to be tailored to fit, we tailor coverages to suit the specific needs of your operation. If you have questions or concerns about garage insurance or any policy, feel free to contact us!