Garage Keepers Insurance – A Coverage for Customer Vehicles on Site
With so many cars under their care, auto-related businesses, like auto repair shops and car dealerships, face specific risks. One of the biggest is damage to customer vehicles left in their possession—a scenario traditional garage liability insurance may not cover. That’s where garage keepers insurance comes into play.
TL;DR
- Garage keepers insurance is a type of insurance that provides coverage for customer vehicles left under the care of businesses such as auto repair shops.
- It is vital for preventing substantial financial losses and maintaining a business’s reputation.
- A common misconception is that garagekeepers coverage overlaps entirely with garage liability insurance, hence, it is unnecessary—it is not!
- A quick win for agencies is to offer garage keepers insurance alongside garage liability insurance and help clients understand the specific protections each policy provides.
What is Garage Keepers Insurance in Insurance?
In layman’s terms, garage keepers insurance is coverage designed to protect businesses from financial losses if a customer’s vehicle is damaged while it is being serviced, stored, or otherwise maintained at the business’s premises.
On a technical level, garage keepers insurance typically appears as an endorsement on a garage liability policy, making it an extension of this coverage. This policy protects against specific risks associated with garage operations, such as damage to a customer’s vehicle due to collision, theft, vandalism, or fire.
Key Related Terms to Know
- Garage Liability Insurance: Coverage protecting a garage business from any bodily injury or property damage caused by their operations or products.
- Garagekeepers Legal Liability (GKLL): This is coverage provided under a garage keepers insurance policy that only pays for damage to a customer’s vehicle if the insured is legally liable.
- Direct Primary Coverage: A coverage type under garage keepers insurance. It covers a customer’s vehicle REGARDLESS of whether the garage is legally liable for the damage.
- General Liability Insurance: A basic business insurance policy that covers bodily injury, property damage, and personal injury caused by a business’s operations, products, or injuries that occur on the business premises.
Common Questions About Garage Keepers Insurance
What is the difference between Garage Liability and Garagekeepers Insurance?
Garage liability insurance generally covers liability arising from the business operations while garage keepers insurance deals with damage to customer vehicles that are under the care, custody, or control of the business owner.
Who needs Garagekeepers Insurance?
Any business that keeps clients’ vehicles on their premises—such as auto service businesses, auto repair shops, towing companies, auto parts stores, car washes, and service stations—should consider garage keepers coverage.
What kind of damage is covered by Garagekeepers Insurance?
Garage keepers insurance usually covers losses due to fire, explosion, theft, vandalism, and collision. However, coverage may vary based on the specific policy and the insurer.
How much does Garagekeepers Insurance cost?
The cost of garage keepers insurance can vary greatly depending on factors such as the number of vehicles in custody, the total value of these vehicles, the garage’s location, and the coverage limits and deductibles chosen.
Garage Keepers Insurance vs. Garage Liability Insurance
Garage keepers insurance is often confused with garage liability insurance. However, these coverages are distinct and serve different purposes:
Comparison Area | Garage Keepers Insurance | Garage Liability Insurance
|
Primary use case | Protection for customer vehicles in the care of the business | Coverage for operations related to the garage business |
Coverage / concept type | First-party coverage | Third-party liability coverage |
Typical exclusions | Damage from faulty workmanship, parts, or inadequate warranties | Damage to customer vehicles |
Who is most affected by errors | Any business that stores or services customer vehicles | Garage businesses like auto repair shops, car dealerships, etc. |
Common mistakes | Assuming it’s the same as garage liability coverage | Not realizing it doesn’t cover customer vehicles on-site |
Real Claim Examples Involving Garage Keepers Insurance
Scenario 1: Your auto repair shop is fixing a customer’s car when a fire breakout results in extensive damage to the vehicle. Your garage keepers insurance coverage will handle the cost of fixing or replacing the client’s car.
Scenario 2: A client’s car is parked overnight at your tire shop. Bizarrely, thieves break in and steal the expensive, exclusive rims. The garagekeepers liability insurance would cover the loss.
Scenario 3: During a busy day at your car wash, an employee accidentally scratches a high-end car. The garagekeepers policy can handle the cost of repainting the car and any other associated expenses.
Limitations and Common Mistakes
- Not understanding the difference between Garagekeepers and Garage Liability Coverage.
- Assuming that Garagekeepers Insurance covers damage due to poor workmanship.
- Forgetting to regularly update insurance policies to reflect the current value of customer vehicles.
- Not choosing a suitable coverage type: Direct Primary, Direct Excess, or Legal Liability.
How to Explain Garage Keepers Insurance to Clients
Personal Lines client: Think of garage keepers insurance as a safety net for your auto business. Just like you insure your own car, this policy insures your customers’ cars while they’re in your care. It’s protection for those what-if moments, like theft or a fire at your shop.
Small Business owner: When you’re running a business, the unexpected can and will happen. That’s why you have business insurance. But if you’re servicing cars, you also need garage keepers insurance to cover customer vehicles on your premises. It’s a small extra cost that can save you a lot of trouble down the road.
CFO or Risk Manager: In risk management, coverage gaps are our biggest concern, right? If you’re in the auto services industry, one of those gaps could be customer vehicles. Garage keepers insurance plugs that hole by covering customer vehicles in your care, custody, and control—complementing your garage liability and general liability policies.