Garage Liability is the equivalent of combining a business auto policy with a commercial general liability policy.
General Liability: Covers bodily injury, property damage, advertising injury, and personal injury resulting from premises, operations, products, and completed operations. It is meant to protect the assets of the insured business against a claim from a third party alleging damages.
Business Auto: Covers bodily injury and property damage resulting from the use of autos.
A Garage Liability policy has a “care, custody, or control” exclusion which states that personal property (customer’s vehicles) in the care, custody, or control of the dealer will not be covered by the garage liability policy. Garage keepers coverage must be purchased.
Let’s compare Garage Liability with Garage Keepers coverage.
Garage Liability: Covers the insured’s (usually a dealership) legal liability to pay damages to an injured third party claimant. This liability can result from two high-level causes.
(1) Operation of Autos: Includes both vehicles owned by the business and being held for sale or any other autos owned by someone else and being used in the business operations. For example:
- Test driving a customer’s auto during the repair process.
- Parts driver is involved in an accident while making a delivery.
- A manager is driving a demo vehicle and gets into an accident.
(2) Other Dealership Operation: This includes things like bodily injury, property damage, advertising injury, personal injury, possible mental injury, and discrimination. For example:
- Slip and fall (Premises/Operations).
- A repair of customer’s auto malfunctions and damages the vehicle or injuries a third party as a result (Products/Completed Operations).
Garage Liability Coverage: Provides protection for the customer’s auto in the care, custody, or control of the insured business. It is typically packaged with the garage liability policy. There is a separate limit for the garage keepers coverage based on the number and value of customer vehicles in the custody of the insured at one time. Coverage is offered in three levels.
Garage Keepers Legal Liability: Provides protection when the insured business is legally liable for damage done to a customer’s auto. For example, a mechanic causes an accident while test driving a vehicle. In this instance, the vehicle is covered.
Direct Primary: Provides protection regardless whether or not the insured business has been negligent and legally liable. For example, the customer’s vehicle is locked on an insured’s lot. It is stolen. Direct primary will provide protection as the insured has done nothing negligent.
Direct Excess/Excess Legal Liability: This protects the insured regardless if they were legally liable. However, if the insured was not legally liable, the policy only pays in excess of any other collectible insurance.
Be sure to read the policy carefully to understand all coverages, limitations, and exclusions.