Garage Operations

Garage operations are somewhat unusual. They are made up of business operations that have a very high exposure to automobile liability. In such instances, the lines between the general liability for the operations and the automobile liability exposures blur and overlap. A general liability policy does not provide enough coverage and a commercial auto policy provides too much.

The garage policy was developed to provide comprehensive liability coverage to protect both the general liability and automobile liability exposures in one coverage form. The Garage Coverage Form contains premises liability, products liability, automobile liability and automobile physical damage coverages. Operations that should be protected with the Garage Coverage Form include the following:

  • franchise and non-franchise auto dealers
  • truck dealers
  • motorcycle dealers
  • snowmobile and recreational vehicle dealers
  • new and/or used trailer dealers
  • vehicle repair shops
  • service stations
  • storage garages and
  • public parking places

The Garage Coverage Form is flexible, having the ability to cover a wide variety of automobile loss exposures. Besides covering vehicles that are owned by the covered business, it may also cover vehicles that are non-owned (rented or borrowed), trucks and other non-private passenger vehicles, trailers and mobile equipment. Coverage may even apply to vehicles that are privately owned by employees, but were involved in a work-related loss.

Example: Paul really liked his job at The Friendly Garage. He had just started and was learning the ropes, so when his boss asked that he make the deli run for lunch he was all for it. The boss plus eight other employees put in orders. Paul called them in and then headed out to pick them up. As he was returning with the items, a drink lid popped off and he bent over to readjust it. At that same moment, the car in front of him stopped. He plowed into the car which set off a chain reaction, eventually damaging six vehicles. All drivers brought claim against Paul and The Friendly Garage (once they learned Paul was traveling on company business). The owner of Friendly Garage and his insurance company are still arguing over whether the lunch run qualifies as being part of their garage business.

A garage policy may also be written to customize how coverage applies to different types of vehicles. For instance, Joe's Towing Service has a fleet of four tow trucks, as well as a sedan used by the owner. The towing service also does repairs and regularly has customer vehicles on their premises. Rather than having both liability and physical damage on all cars the services either owns or handles, Joe selects the following:

Liability and Physical Damage - for his two newer tow trucks and his sedan.

Liability only - for his two, older tow trucks

Physical Damage Liability only - for vehicles belonging to customers

Like other types of policies, a garage coverage form also provides legal defense coverage. In other words, the policy handles the costs associated with defending the policy owner against claims and lawsuits. This protection does not affect the separate limits of insurance that are selected for the liability coverages.

If you are involved in a business that is exposed to a higher than normal level of automobile liability, perhaps you should seek an insurance professional and explore whether you need the protection of the Garage Coverage Form.

COPYRIGHT: Insurance Publishing Plus, Inc. 2005

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