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Understanding Garage Keepers Policy: Coverage Explained

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Understanding Garage Keepers Policy: Coverage Explained

What does a garage keepers policy cover? If you own a business that services, stores, or repairs vehicles, it’s crucial to understand how this policy can protect you. Here’s a quick overview:

  • Customer vehicles:
  • Accidental damage (like collisions)
  • Fire
  • Severe weather (such as wind or hail)
  • Theft
  • Vandalism

Garage Keepers Liability insurance is essential for businesses handling customer vehicles, providing coverage for a range of risks including accidents, natural disasters, and criminal activities.

I’m Ryan McEachron, CEO of ISU Insurance Services ARMAC Agency in Victorville. With experience in the insurance industry and public service, I am here to help you understand the ins and outs of what does a garage keepers policy cover.

Garage Keepers Insurance Infographic - what does a garage keepers policy cover infographic brainstorm-4-items

What Does a Garage Keepers Policy Cover?

Types of Coverage Under Garage Keepers Policy

Garage Keepers insurance is designed to protect customer vehicles while they are in your care. This coverage comes in three main types: Legal Liability, Direct Primary, and Direct Excess.

Legal Liability Coverage
Legal Liability is the most common form. It covers damages only if your business is legally responsible. For example, if a mechanic crashes a customer’s car during a test drive, the policy would cover the repair costs because the mechanic is at fault.

Direct Primary Coverage
Direct Primary is more comprehensive. It covers any damages to the customer’s vehicle, regardless of fault. For instance, if a thief breaks into your shop and steals a customer’s car, Direct Primary coverage would pay for the loss even though your shop did nothing wrong.

Direct Excess Coverage
Direct Excess is a middle-ground option. It provides coverage only after the customer’s own insurance has been exhausted. For example, if a fire damages a customer’s car and their personal insurance covers up to a certain amount, Direct Excess would kick in to cover the remaining costs.

Common Claims Covered by Garage Keepers Insurance

Garage Keepers insurance can cover a wide range of incidents. Here are some common claims:

Theft
Imagine you run an auto repair shop. One night, thieves break in and steal a customer’s car. Without Garage Keepers insurance, you might have to pay for the stolen vehicle out of pocket. With it, the insurance policy covers the loss.

Vandalism
Consider a scenario where someone vandalizes cars parked in your shop’s lot. Legal Liability coverage wouldn’t help unless you were at fault. But Direct Primary coverage would cover the repair costs, providing peace of mind to both you and your customers.

Fire
Fires can be devastating. If a fire breaks out in your shop and damages customer vehicles, Garage Keepers insurance can cover the repair costs. Direct Primary and Direct Excess policies would both provide coverage, but Direct Excess would only kick in after the customer’s insurance has been used.

Collision
Accidents can happen, even in a controlled environment like a garage. If a car falls off a lift or a mechanic accidentally crashes a car during a test drive, Garage Keepers insurance would cover the damages.

Comprehensive, Specified Causes of Loss, and Collision Coverage

Garage Keepers policies also include different types of coverage for specific incidents:

Comprehensive Coverage
This covers non-collision-related damages like theft, vandalism, and natural disasters. For example, if hail damages a customer’s car, comprehensive coverage would handle the repair costs.

Specified Causes of Loss
This is a more limited form of comprehensive coverage. It only covers specific risks listed in the policy, such as fire, theft, or vandalism. It’s a cheaper option but offers less protection.

Collision Coverage
This covers damages resulting from collisions, whether the car is being driven or parked. If a mechanic accidentally backs a car into a pole, collision coverage would pay for the repairs.

In summary, Garage Keepers insurance offers various types of coverage to protect your business and your customers’ vehicles from multiple risks. Whether it’s covering theft, vandalism, fire, or collisions, understanding what does a garage keepers policy cover is essential for any business dealing with customer vehicles.

Who Needs Garage Keepers Insurance?

Businesses That Benefit Most from Garage Keepers Insurance

Auto Repair Shops: Mechanics and repair shops frequently deal with heavy machinery and complex repairs, increasing the risk of accidents. Imagine a scenario where a mechanic forgets to set the parking brake, and a customer’s car rolls into another vehicle. Garage keepers insurance would cover the damages.

Service Stations: These businesses often perform various services like oil changes, tire rotations, and minor repairs. With multiple cars coming in and out daily, the risk of accidental damage is high. This insurance ensures that your business isn’t financially crippled by such incidents.

Car Dealerships: Dealerships need coverage for test drives, customer visits, and potential accidents on the lot. For instance, if a customer accidentally damages another car during a test drive, garage keepers insurance can cover the repair costs.

Towing Services: Tow-truck operators often work in hazardous conditions, making this insurance crucial for covering potential liabilities. If a towed vehicle gets damaged while in transit, garage keepers insurance will help cover the repair costs.

Body Shops: These businesses specialize in repairing vehicle exteriors, from minor dents to major collision damage. Given the nature of their work, accidental damage can occur. For example, if a technician accidentally scratches a car while painting it, garage keepers insurance will cover the repair expenses.

Parking Facilities: Parking garages and valet services handle numerous vehicles daily, making them prone to accidents and theft. If a car gets stolen or damaged while parked, this insurance will cover the losses, providing peace of mind to both the business and its customers.

Detailing Services: These businesses focus on cleaning and enhancing the appearance of vehicles. Accidents can happen during the detailing process, such as spilling chemicals that damage the car’s interior. Garage keepers insurance ensures that these incidents don’t result in hefty out-of-pocket expenses.

Any business that regularly takes custody of customer vehicles can significantly benefit from garage keepers insurance. It not only protects your business from financial loss but also builds trust with your customers, knowing their vehicles are safeguarded while in your care.

Next, we’ll explore How Does Garage Keepers Liability Insurance Protect Your Business? and delve into real-life scenarios where this insurance is essential.

How Does Garage Keepers Liability Insurance Protect Your Business?

Real-Life Scenarios Where Garage Keepers Insurance is Essential

Garage keepers liability insurance offers critical protections for businesses handling customer vehicles. Let’s break down how it helps in key areas:

Risk Management

Running an auto service business involves many risks. Employees might accidentally damage a vehicle, or a natural disaster could strike. Having garage keepers insurance helps manage these risks by providing a safety net.

Financial Protection

Imagine a scenario where a customer’s car is stolen from your repair shop. Without garage keepers insurance, you might have to pay out-of-pocket to replace the vehicle. This could be financially devastating. With insurance, these costs are covered, protecting your business’s financial health.

Customer Trust

When customers know their vehicles are protected under your insurance policy, it builds trust. They are more likely to return and recommend your services. For instance, if a customer’s car is damaged in a storm while in your care, your insurance will cover it, showcasing your professionalism and reliability.

Theft

Theft is a common risk for auto businesses. According to Forbes, garage keepers insurance will cover the cost if a customer’s car is stolen from your premises. This ensures you don’t bear the financial burden alone.

Natural Disasters

Natural disasters like hurricanes or floods can cause significant damage. In Texas and Virginia, this insurance is often referred to as “storage location insurance.” It covers damages from severe weather, ensuring that your business can recover quickly and continue operations.

Accidents

Accidents happen, even in controlled environments. If an employee accidentally crashes a customer’s car during a test drive, your garage keepers insurance will cover the repair costs. This is vital for maintaining your business’s reputation and avoiding costly legal battles.

Next, we’ll compare Garage Keepers Insurance and Other Business Policies to understand their differences and how they complement each other.

Comparing Garage Keepers Insurance and Other Business Policies

Understanding the Differences: Garage Keepers vs. Garage Liability

When it comes to insuring your automotive business, understanding the differences between Garage Keepers Insurance and other business policies is crucial. Let’s break down the distinctions between Garage Keepers Insurance, Garage Liability, General Liability, and the Business Automobile Policy.

Garage Liability Insurance

Garage Liability Insurance covers claims made against your business for bodily injury or property damage caused by your operations. This includes premises liability and product liability claims. For example, if a customer slips and falls in your shop, this policy will cover their medical expenses and any legal fees.

However, it does not cover damage to a customer’s vehicle while it’s in your care. For that, you need Garage Keepers Insurance.

General Liability Insurance

General Liability Insurance (CGL) provides broad coverage for general business risks. It covers bodily injury, property damage, and personal injury claims that occur on your business premises or as a result of your business operations.

While CGL is essential for many businesses, it excludes many risks specific to the automotive industry, such as damage to customer vehicles. This is where Garage Keepers Insurance comes into play.

Business Automobile Policy

A Business Automobile Policy covers vehicles owned and operated by your business. This includes liability and physical damage coverage for vehicles like service trucks or tow trucks.

Unlike Garage Keepers Insurance, a Business Auto Policy does not cover customer vehicles in your care. For instance, if a customer’s car is damaged while being serviced, your Business Auto Policy won’t help, but your Garage Keepers Insurance will.

Coverage Scope

Garage Keepers Insurance specifically covers customer vehicles in your care, custody, or control. This includes protection against theft, vandalism, fire, and collision.

Garage Liability Insurance, on the other hand, covers third-party claims for bodily injury or property damage caused by your business operations.

Protected Assets

Garage Keepers Insurance protects customer vehicles, ensuring that any damage while in your care is covered.

Garage Liability Insurance protects your business from legal claims due to accidents or injuries on your premises.

Legal Liability

Garage Keepers Insurance includes different types of coverage:

  • Legal Liability: Covers damage when your employee is at fault.
  • Direct Primary: Covers damage regardless of fault.
  • Direct Excess: Covers damage in excess of the customer’s own insurance.

Garage Liability Insurance covers legal fees and settlements if your business is sued for causing bodily injury or property damage.

Next, we’ll dive into Frequently Asked Questions about Garage Keepers Insurance to address common concerns and provide further clarity.

Frequently Asked Questions about Garage Keepers Insurance

What is the primary purpose behind garagekeepers insurance?

The primary purpose of garagekeepers insurance is to protect vehicles that are in your care, custody, or control. This means if you run a business like an auto repair shop, car wash, or towing service, garagekeepers insurance covers damage to your customers’ vehicles while they are on your premises or being serviced.

For example, if a customer’s car is damaged by fire, theft, vandalism, or even a mishap by one of your employees, garagekeepers insurance can help cover the repair or replacement costs. This protection is crucial for maintaining customer trust and avoiding significant out-of-pocket expenses.

What kind of customer is a garagekeepers policy designed for?

Garagekeepers policies are designed for businesses that regularly handle, store, or service customers’ vehicles. These include:

  • Auto Repair Shops: Mechanics who service and repair vehicles.
  • Car Dealerships: Dealerships that store and display vehicles for sale.
  • Service Stations: Gas stations that offer vehicle maintenance services.
  • Towing Services: Companies that tow and store vehicles.
  • Car Washes: Businesses that clean and detail vehicles.
  • Body Shops: Shops that perform vehicle body repairs and painting.
  • Parking Facilities: Garages or lots that offer vehicle storage.

If your business fits into any of these categories, a garagekeepers policy is essential to protect against potential risks.

What does garagekeeper’s coverage of the garage coverage form cover?

Garagekeepers coverage can be broken down into three main types:

  • Legal Liability: Covers damages when your employee is at fault. For instance, if a mechanic crashes a customer’s car during a test drive, this coverage would apply.

  • Direct Primary: Covers damages regardless of fault. This means even if no negligence is involved, such as in cases of theft or severe weather, the policy will pay for the damages. It provides peace of mind for your customers, knowing their vehicles are protected no matter what.

  • Direct Excess: Functions similarly to direct primary but only kicks in after the customer’s own insurance is exhausted. For example, if a fire damages a customer’s car, and their personal insurance covers part of the cost, direct excess will cover any remaining expenses.

Each type of coverage ensures that your business is protected from different scenarios, providing comprehensive protection for your customers’ vehicles.

Next, we’ll explore Who Needs Garage Keepers Insurance to identify the types of businesses that benefit most from this essential coverage.

Conclusion

At ISU Armac, we understand that every garage business has unique needs and risks. That’s why we offer customized insurance solutions tailored to protect your specific operations. Our goal is to help you safeguard your business and your customers’ vehicles, providing you with peace of mind.

Protecting your business and reputation is crucial. With the right insurance policies, you can focus on what you do best—servicing and caring for vehicles—without worrying about unexpected financial setbacks. Whether it’s damage from a natural disaster, theft, or an accident, having comprehensive coverage ensures that your business can handle these challenges.

Choosing the right coverage can be daunting, but we’re here to help. Our team of licensed professionals will guide you through the process, ensuring you get the protection you need at a price you can afford. From garage liability insurance to garage keepers insurance, we offer a range of solutions to keep your business running smoothly.

Ready to protect your garage business with the right insurance? Contact us today to get started and ensure peace of mind for you and your customers.

Next, we’ll explore Who Needs Garage Keepers Insurance to identify the types of businesses that benefit most from this essential coverage.