Garage insurance policy will always be a combination of business automobile cover form and general liability commercial cover form. This brings in the almost full coverage for a garage business. However, it is not considered sufficient in terms of full coverage for the policyholder. A garage business is exposed to risks that are associated with the products and services of the business operations. This makes it mandatory and efficient for a garage owner to purchase the relevant insurance cover for his or her business. Garage businesses are auto exposed in terms of owned, non owned and hired automobiles. Instead of taking out separate insurance covers for your business, you can purchase one policy that contains two types of coverages in a single form.
Section II Of The Garage Form (Garage Liability Insurance)
In this section, there are two liabilities which are covered and clearly defined by the form. The garage operations, that do not cover automobiles, and the garage operations that covers automobiles in terms of bodily harm and damage to property. In addition to this, pollution by the business operations are covered under this section for any loss suffered. However, this caters for automobiles only. In order to understand the coverage of garage liability insurance, you have to get the exact definition and what each clause or phrase means in terms of coverage.
The form defines garage operations as ownership, use of the location for garage business and anything else that joins the location, including the roads. It continues to expound on the same by including any type of operation necessary or incidental to the garage business. What is necessary for a garage business can be interpreted in a broad perspective. However, the underwriter of the same will be involved in determining what is necessary to your business and choose to include it in the policy for coverage or not.
Auto has also been defined as land motor vehicle, trailer/semi-trailer. This definition is broad in a big sense since it does not specify the type of vehicle or performance of the same. In that case, it can cover mobile equipment and also trailers and vehicle that use public roads.
To correct this ambiguity, there are symbols that expose the type of automobiles to be covered under this form. Symbol 30 spells out the coverage of client’s automobile which is left under the care of the policy holder. As a result, it will help bring in garage keepers insurance cover.
Symbol 31 will bring to light coverage of automobile for the dealers’ autos held for sale by trailer dealers or non- dealers, against physical damage.
The definition of terms of in this form continues with the definition of insured. Well, it states that insureds include the policyholder, users of the autos covered in the policy and anyone who is liable for the actions of the policyholder.
However, employees while using their own vehicles, owners of the hired vehicle, customers of the dealer and a partner using their own vehicle do not qualify as insureds. In that case, managers and legal experts are left out of the coverage in this form. They can, however, be added by endorsement of the same to provide full coverage for the ones left out.
The following will also be excluded from the policy form:
• Intended or expected injury.
• Contractual liability apart from the contracts of the insured.
• Workers and employee compensation.
• Leased automobiles.
• Employer’s liability.
• Liquor liability.
• Defective products, etc
Since garage liability is not as wide as commercial general liability insurance, endorsements are added to cater for the excluded covers which include:
• Personal injury,
• Advertising injury.
• Legal liability,
• Medical malpractice
• Liquor liability non-owned watercraft, among others exclusions.
When such previously excluded items are included as part of the covered items, they become part of the policy.
As garage liability will cover injury, damage to property and pollution due to ownership and use of the covered automobile, you can break down the coverage under pollution. Coverage under this item will also incorporate any type of injury or damage to property due to:
• Oil spill.
• Fluids and lubricants.
• Gases from exhaust pipes.
• And other pollutants from the covered automobile.
This policy is meant to cover any form of bodily harm or damage of property as a result of the pollution by the covered vehicle. This includes the third party coverage in the event where the insured causes another automobile to spill oil or a pollutant in an accident.
Remember that pollution of goods or cargo in transit by the insured is not covered for the damage or loss of value by this insurance cover, even when the auto is covered in the form. Other exclusions will also apply in this policy and as such it limits the insured to a certain limit in terms of coverage. Luckily, you can bring in an additional insurance coverage to cater for such limitations. This is where garage keepers insurance cover comes into place.
Section III Of The Garage Form (Garage keepers)
Garage keepers policy will provide coverage for damages to a client’s vehicle. This falls under the legal liability of an insured. It is with this that garage keepers coverage will take care of exclusions mentioned in the garage insurance cover. This cover is thus important due to care, control and custody which are not part of the liability insurance cover.
Coverage for a client’s vehicle will include some items in order to cover for the damages. The customer must provide proof of negligence by the insured if the loss due to damage is to be covered under this form. It is with this that the clause of legal liability falls into place.
However, loss of goodwill can arise in the case where the customer fails to prove that the insured is negligent. As a result, compensation for the loss due to damage will not come to light.
To prevent this, you can purchase the following direct options to cater for such loss of goodwill:
• Direct excess
In this coverage, liability is not regarded and as such the customer will be compensated for the loss of damage to their automobile. It involves coverage in excess of the coverage of the owner’s auto.
• Direct primary
For this insurance option, the insurer will share the loss of damage with the insurer that is the auto owner’s insurance company. In this option, liability is not also regarded when it comes to compensating for the loss of damage of the vehicle of the client and this goodwill is not lost for the garage owner.
As the insured, you have to determine the limit of coverage in case the risk insured occurs. This can be difficult sometimes. Luckily, you can achieve this by multiplying the average value of autos under your care and the average number of autos under your care in a particular period of time. Although there is no penalty for underinsuring your business, you could miss out on adequate coverage in the case of a huge loss due to a certain calamity, like fire. In that case, you have to select a viable limit to help with sufficient compensation in case the risks covered occur.
Coverage under garage keepers will have deductibles as it comes to physical damage to the client’s vehicle. In that case, any malicious act that can cause damage to the vehicle of a client will be regarded as deductible when it comes to compensation. Also collision deductible will apply for each vehicle irrespective of how many they are.
Garage keepers insurance co9ver also has exclusions which come with the policy. These exclusions will include the following:
• Theft by the policyholder.
• Defective auto parts.
• Loss due to sound receiving devices.
• Loss due to sound producing devices.
• Faulty work on the vehicle.
• Devices that detect radar.
• Loss due to tapes and records.
It is only advisable to purchase both garage liability insurance and garage keepers cover, for your garage business, in order to enjoy full coverage. However, before you proceed, get a clear understanding of what the two types of coverages entail and their scope.
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