If your business takes custody of a customer’s vehicle to park it, keep it to perform a service, you need a Garage Keepers policy to protect your business. While the apparent businesses who need this protection are auto repair shops, auto detailers, oil change facilities, auto body shops and auto glass repair shops, those that offer valet services could be at risk as well.
Understanding Garage Keepers Liability
Garage keeper’s liability insurance protects business owners against physical damage losses that occur to customers vehicles while in their care, custody, and control. It’s important to understand it’s not a physical damage coverage so that it wouldn’t protect your vehicles, but it acts like a physical damage coverage safeguarding other people’s cars.
Garage Keepers Liability is comparable in many ways to Commercial Auto Policy. For example, the coverage options available to you are the same:
- Comprehensive will cover damage to a customer’s auto from any cause other than the vehicle’s collision with another object or if the car was to overturn.
- Specified Causes of Loss is an alternative to comprehensive coverage, and it will cover damage caused by fire, explosion, lightning, theft, mischief or vandalism.
- Collision will cover damage to a customer’s vehicle caused by a collision with another object, or if the vehicle were to overturn.
Breaking it Down
So now that you know what a Garage Keeper policy is let’s look at an example of how it works.
You run a towing business and are called to tow a broken-down car late at night. The mechanic’s garage where it is set to go is already closed, so you store the car in your shop overnight. Unfortunately, criminals bust into your garage and vandalize the customer’s car.
Garage Keepers Legal Liability insurance would pay to repair the damage caused to the customer’s car, up to the limit you select.
Or imagine this scenario. You own a popular cafe downtown, but it’s also notoriously known for the lack of parking. You decide to offer valet parking to keep your customers happy. However, one night the valet is driving a customer’s car when he accidentally hits the gas instead of the brake and smashes into another vehicle. Rightfully upset the customers demand you as the cafe owner pay for the damage.
However, you only have general liability coverage for the cafe, and the insurance company denies the claim because of the care, custody or controls exclusion.
Moral of the story, if you are taking customers cars into your custody, it’s best if you have a Garage Keepers policy even if you aren’t a garage.
We are Here to Help
We know it confusing understanding which policies you need to protect your business. If you aren’t sure if you are leaving yourself open to claim by not carrying a Garage Keepers policy, please give us a call today. We will be happy to discuss the exposures your business may face.