Understanding Garage Keepers Insurance in Georgia
Navigating the complexities of Garage Keepers Insurance can be challenging, not just for clients but even for insurance agents. The confusion often stems from the distinction between “garage liability” and “garage keepers” coverage—terms that are crucial for businesses in the automotive industry.
To clarify these concepts, let’s consider a practical example:
Imagine a customer who recently purchased a vehicle from your dealership returns with a mechanical issue. Your mechanic takes the vehicle for a test drive and, unfortunately, collides with another car. In this scenario, the collision totals both the other vehicle and the customer’s car, and the driver of the other vehicle is injured. The damages to the other vehicle and its driver’s injuries would be covered under your garage liability policy, while the damage to the customer’s vehicle would fall under garage keepers coverage.
However, understanding these coverages requires more than just an example. Let’s break down the essentials:
Garage Liability Coverage
Garage liability coverage is essentially a combination of a business auto policy and a commercial general liability policy, including products and completed operations. It is designed to protect your business from bodily injury and property damage claims that arise from garage operations.
The policy is structured into two main sections:
- Garage Operations Other Than Covered Autos: Covers liabilities related to the ownership, maintenance, or use of your garage premises and the services you provide.
- Garage Operations Covered Autos: Extends coverage to the vehicles you own, maintain, or use in the course of your garage business.
Garage liability coverage is broad, encompassing all operations necessary or incidental to your garage business. However, the definition of “auto” under this policy is also broad, covering any land motor vehicle, trailer, or semi-trailer without specifying requirements like road licensing or the number of wheels. This broadness, while beneficial, also leads to potential gaps in coverage, particularly concerning customer vehicles left in your care.
The Care, Custody, or Control Exclusion
One significant exclusion in garage liability policies is the “care, custody, or control” exclusion. This exclusion means that while your policy covers third-party claims resulting from customer vehicles, it does not cover damage to the vehicles themselves when they are in your care for repair, storage, or test driving. This is where garage keepers insurance becomes essential.
Garage Keepers Coverage
Garage Keepers Insurance is an optional coverage that protects your business against losses to a customer’s vehicle while it is in your care, custody, or control—whether you are servicing, repairing, parking, or storing the vehicle.
There are three types of Garage Keepers coverage:
- Legal Liability: This is the most common type of coverage. It protects you if a customer’s vehicle is damaged due to your negligence, such as if a mechanic damages the car during a test drive or if a vehicle is left unsecured and is stolen.
- Direct Primary: This coverage applies regardless of fault. It covers damage to a customer’s vehicle even if the loss was not due to your actions, such as damage from a natural disaster or a theft where the vehicle was adequately secured.
- Direct Excess: Although less common, this option is highly beneficial. It provides coverage similar to direct primary but only pays out if there is no other collectible insurance, acting as excess coverage.
Why This Matters for Your Business
The distinctions between these coverages are critical for ensuring that your garage business is fully protected. Without the appropriate insurance, you could be left exposed to significant financial risks.
At the Dickerson Agency, we are experts in Garage Keepers Insurance and can guide you through the complexities of these policies. Our goal is to ensure you have the right coverage in place to protect your business from potential liabilities.
Don’t let insurance confusion put your business at risk. Contact us today, and we’ll help you understand your options and secure the coverage that best meets your needs.
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