Protecting your garage operations, garage business, vehicles, and customers is essential as a car dealership or other garage owner or business owner. However, did you know your standard insurance policy may not fully cover vehicles stored or being worked on at your garage business or lot? This is where Garage Keepers insurance can help fill coverage gaps and give your garage keepers liability insurance you greater peace of mind.
As someone operating an automobile business, you face unique risks compared to individual car owners. While your general liability insurance policy protects you from being sued, it likely won’t reimburse the costs to repair or replace a customer’s vehicle if something happens to it in your care.
Why is Garage Keeper’s Liability Insurance Important?
This is the purpose of the Garage Keepers insurance coverage – it is a specific type of insurance tailored for auto dealers and repair shops. Its legal liability insurance coverage provides physical damage protection for customers’ vehicles and your inventory while they are in your possession. With clear terms and coverage per the standard of garage keepers’ insurance, car dealership insurance policy, or liability insurance policy you select, filing a claim is straightforward if an insured loss occurs on-site only.
This article will explain the benefits of including a Garage Keepers insurance policy, standard garage liability insurance policy, or a garage liability insurance policy in your business insurance or dealership or garage liability insurance and protection plan. We will explore primary coverage, covered risks, garage liability, eligible vehicles, common policy details, and how claims are handled. The goal is to help you make an informed decision on securing this valuable additional coverage to protect your business and clients.
Risks to Vehicles on a Dealership Lot
When cars are parked on your sales lot or storage areas, they can, unfortunately, face various risks of damage or theft. Weather events like hailstorms, high winds, or flooding during heavy rains can dent vehicles left outside. Fires are another concern, whether caused by electrical faults or other hazards if vehicles are stored near combustible materials.
Protect Your Assets and Customer Relationships
Even during daylight hours, customer test drives or employee transport of cars between buildings opens opportunities for accidents. A distracted driver could swerve off the pavement and into parked vehicles or lose control on slippery surfaces.
Given these many situations largely outside your control, it’s easy to see why vehicles on open lots or garages require specialized legal liability coverage. Their valuable and fragile nature makes comprehensive insurance critical to protect your business operations, customers’ cars, your customers’ vehicles and assets, and your customers’ cars and relationships.
Common Types of Vehicle Damage & Loss
When incidents of extreme weather do occur to vehicles at a dealership, the damage sustained can vary widely in nature and cost. One of the most expensive is obvious total losses from fires. Not only does the vehicle get destroyed, but repairs are further complicated by lingering smoke damage contaminating the upholstery and electronics of other cars.
More moderate impacts may involve accidental damage or property damage, things like cracked windshields, broken headlights, and minor bodywork from accidents in small parking lots. Vandalism could amount to slashed tires, spray-painted graffiti, or air let out of tires.
Storage Location Insurance
For customers’ vehicles undergoing service, mechanical failures sometimes happen while driving in and out of auto repair shops and bays. Test drives may result in scratches, minor dings from tight confined spaces, or damaged bumpers backing into garage walls. Interior stains or tears to seating from another customer’s car or children playing are another possibility.
Floodwaters that rise unexpectedly during heavy rains represent a unique risk, as even just a few inches can damage standard transmission vehicles through electrical shorts. It’s easy to see why comprehensive protection tailored for auto dealerships is a necessity.
What is Garage Keepers Insurance?
Garage Keepers insurance is a type of auto physical damage coverage designed specifically for auto dealerships and repair shops. It provides protection and covers property damage for vehicles entrusted to your business’s care that are either part of your customer’s car dealership inventory or belong to your customer’s car part customers.
Unlike a standard auto insurance policy, your Garage Keepers insurance has primary insurance coverage that steps in to cover physical loss or damage losses for vehicles in your custody. This primary insurance coverage for small businesses includes reimbursements to repair or replace vehicles harmed on your premises from events like collisions, fires, hail, or theft. It also protects garage liability and covers your business property and assets from liability insurance claims if your negligence somehow contributed to the incident.
Types of Garage Keepers Policy
There are two main parts to a full Garage Keepers insurance or Keeper’s policy: direct primary coverage of the Garage keeper’s insurance and Liability and Garage keepers Coverage. The standard full garage keeper’s liability insurance and liability policy component resemble general liability protection, shielding you from the legal costs of getting sued if at fault for a customer’s vehicle damage. Meanwhile, direct primary coverage of the full garage keeper’s insurance liability insurance and physical damage protection meets the direct primary costs of repairing or replacing a vehicle after a covered loss.
Premiums are based on your annual number of vehicle sales, inventory stock levels, repair shops and bays, and claims history. Deductibles work the same way as standard commercial auto insurance policies, with the option to raise or lower the amount you pay per claim to adjust costs. Comprehensive Garage Keepers insurance protection makes filing reimbursement seamless after eligible incidents. So, in short, it provides affordable protection required specifically for automobile dealerships and other repair shops and facilities beyond regular small business owners’ insurance and options.
Covered Perils That Come with Garage Liability Insurance
Most standard Garage Keepers insurance policies protect vehicles under your care from physical damage losses similar to those covered under automobile insurance as primary coverage only. This primary insurance coverage includes reimbursement for repairs if a vehicle catches fire on your property due to electrical faults, arson, or another combustion source. Theft is also covered under garage keepers policy as direct primary coverage, whether it’s an opportunistic theft or an organized auto theft ring stealing high-end cars.
Garage Liability Insurance: Collisions and Damages
Collision damages are reimbursable if vehicles collide in situations like multi-car accidents in tight parking areas or one car crashing into another car or stored autos. Vehicles vandalized with damage, such as scratched paint, broken windows, or slashed tires, are also covered. Natural disasters or extreme weather that cause vehicle or property damage, like hailstorms, flooding, earthquakes, or hurricanes, are considered covered perils. Even falling objects such as trees or tree limbs that fall on stored vehicles during storms are covered causes of accidental property damage, bodily injury, or loss of personal property.
In some cases, damage from explosions, whether due to mechanical failures, combustion sources, or other detonations, may also be covered by a garage keeper liability insurance policy. Additional flexibility extends garage liability coverage to certain employment-related situations, such liability insurance covers losses such as employees’ serious bodily injury, personal property damage or vehicles damaged while transporting customers during test drives. This breadth of covered perils makes Garage Keepers liability insurance an essential policy component for protecting auto dealerships from unforeseen risks.
Determining Appropriate Coverage Limits
When setting up a Garage Keepers insurance liability insurance policy, it’s important to select adequate direct excess coverage limits that align with your needs. Limits define the maximum amount of direct excess coverage the garage policy or insurer will pay per vehicle in the event of a loss. If damage exceeds the limit amount of direct excess coverage, you are responsible for costs above what garage keepers’ insurance liability policy is reimbursed per vehicle deductible.
Consider factors like makes, models, trim levels, and average prices in your area. Setting bare minimum state-mandated levels of secondary coverage could leave you underinsured for more expensive luxury brands.
High-income customers may drive exotic imports worth over $100,000. It’s also wise to periodically review coverage amounts as business operations change. Inventory fluctuations, expanded services, or economic shifts could impact average vehicle values over time. Some insurers let dealers adjust limits flexibly as needed.
Eligible Vehicles, Including Inventory & Customer Cars
For a Garage Keeper liability policy to be fully effective, it’s essential to understand the scope of vehicles that are protected by a garage keeper’s liability policy. Most directly cover your garage keepers’ liability, which covers your dealership’s in-stock inventory of stereo equipment owned by or consigned to the garage keeper’s business. This provides replacement value protection for new, used, demo, or rental cars.
Customer vehicles left on the premises are also typically protected by legal liability coverage from here. This applies broadly to vehicles in your garage for repairs, maintenance, or mechanical work. This same storage location insurance can be useful for overflow or vehicles not ready for delivery.
Coverage Limits on Vehicles
Limiting coverage to garage liability insurance to provide coverage covers only repairs at body shops, and the coverage limits only vehicles actively being worked on in body shops at the time of loss, which leaves gaps. Comprehensive garage liability insurance policies protect vehicles before and after repair work at body shops as long as they remain on dealership property under your care, custody, and control.
Be sure to understand if related vehicles like tow trucks, service pickups, or collector cars you own are treated as general or garage liability and insurance eligible standard your garage liability insurance policy. Defining included classes legal garage and general liability insurance coverage upfront prevents disputes over applicability following a claim. With the mobility standard maintenance and transit needs of customers’ vehicles in a busy dealership, comprehensive protection from legal garage liability for all vehicle types passing through your facilities, is the safest approach.
Situations Where Coverage Applies
For the Garage Keepers liability insurance to respond to covered losses, the damaging incident per vehicle deductible generally must occur while the protected vehicle is under the control or custody of the garage keeper’s insurance liability insurance dealership. This includes when physically situated on the insured by garage keepers’ insurance liability, policy, or business premises, such as vehicles parked on displayed lots, garaged in repair areas, or stored on surrounding property like vacant adjacent land.
Coverage also temporarily extends to vehicles removed from the dealership under certain conditions, like short-term errands driving to vehicle transporters, transport between dealership locations, or trips to car washes. Vehicles being worked on as part of ordinary servicing and maintenance qualify as in the insured’s custody, as do those awaiting pickup after servicing is complete, as long as they have not yet been driven away from the customer’s property by the customer’s car.
It’s important to note garage keepers’ liability insurance coverage does not apply once control of other vehicle has been relinquished, such as when a test drive begins on public roads or after formal ownership transfer at point of sale. However, Garage Keepers insurance policies offer valuable protection during vehicles’ vulnerable periods on premises under a dealership’s supervision.
Filing a Claim After an Insured Incident
While avoiding vehicle damage will always be preferable, having the right insurance is invaluable when a covered loss does occur at your dealership. Filing a reimbursement claim with a full Garage Keepers insurance policy in place is straightforward.
The first step is promptly notifying the customer’s car, insurance industry, your agent, or insurance company about the incident. Provide key details like date, location, and known circumstances of the damage event. Together with business insurance, you may conduct an on-site examination to investigate and document losses.
If your repair shop will perform the work, the customer’s vehicle or insurer can issue payment directly to your facility. Otherwise, funds go to the customer’s vehicle or owner so repairs can be made elsewhere. Temporary car rentals may also be covered while the customer’s vehicle is unusable.
Be prepared to submit damage estimates and proofs of identity for involved vehicles and their owners. Your policy may require starting repairs on site and within a specified period. Reasonable cooperation from repair shops is important to verifying a claim’s validity and ensuring swift resolution.
Garage Keepers coverage ensures unavoidable incidents don’t jeopardize customer relationships or financially strain your garage keeper’s business operations. When loss events do strike, a streamlined claims service helps minimize the expenses related to disruption.
The insurance premium cost for a full Garage Keepers liability insurance policy depends on several risk-related factors underwriters consider. Dealerships with larger vehicle inventories can expect higher prices due to increased coverage amounts needed. Likewise, those servicing luxury brands may pay more than volume sellers.
Claims history carries substantial weight – a record of past claims filed will cause rates to rise significantly. Implementing loss control measures like security protocols, employee training, and regular maintenance helps create a safer risk profile over time. The location can also impact costs. Urban areas with elevated theft rates mean premiums go up. Being in a hail- or flood-prone natural disaster zone also raises insurer risk.
Better garage construction type is considered, as underwriters view fenced lots and gated, secured structures more positively than open areas. Ensuring additional expenses related to property beyond vehicles may result in a package discount.
Selecting the Right Insurer
When choosing a Garage and Keepers liability coverage provider, auto dealerships have important criteria to consider beyond just premium pricing. The right fit depends on specific needs and risk appetite. Look for insurers highly experienced in serving the automotive industry. They best understand unique dealership exposures compared to general commercial carriers. Ask about flexibility adjusting limits, multi-location coverage, and endorsements tailored for ancillary risks. Comprehensive options maximize protection.
Local agents familiar with regional perils provide knowledgeable guidance in crafting the right policy. Ongoing consultation helps with changing risks. Overall value weighs several factors, ensuring proper financial protection now and well into the future. Dealers making informed insurance selections partner with carriers committed to the protection, service, and the success of their small businesses here.
Garage Keepers insurance coverage is indispensable to any automobile dealership or repair shop’s risk management strategy. Safety measures aim to prevent losses, accidents, and damage events, an inevitable cost of doing business in this industry. Without proper and comprehensive liability coverage here, a single sizable claim could financially cripple operations.
By selecting a tailored policy with primary coverage and sufficient protection levels from a carrier specialized in automotive risks, auto dealers gain peace of mind knowing their assets and livelihood are secure. Partnering with knowledgeable agents enables customizing policies to the auto dealers’ changing needs over time.
With the right business insurance, company, and management practices working together on their business insurance and legal liability insurance, auto dealerships can focus fully on their core missions with assurance their vehicles, stereo equipment, property, and customers remain well protected. Who you decide to place your trust in and partner with for your business insurance protection makes a difference.
Two key reasons to choose Professional Insurance Advisors over others is our “whole life or risk” approach to helping you understand your risks and helping you build a comprehensive insurance plan, not just buy a policy.