Auto dealers, repair shops, body shops, and more all need Garage Insurance to cover their businesses, but what does it really cover? In today’s post, we will go into detail on what exactly Garage Liability Coverage and Garagekeepers Coverage are and why you need them to be successful in your automotive business.

Garage Liability Insurance

Garage liability insurance is basically a general liability and commercial auto liability policy combined into one policy to cover your operations with and without autos. For example, if a client slips and falls in your lobby, this will act as a general liability policy; whereas if one of your employees drives a customer vehicle and causes an accident, this will act as an auto liability policy. In policy language, this coverage is separated into “garage operations other than covered autos” and “garage operations – covered autos.”

This kind of insurance is especially important for dealers in that it will cover liability for all autos on their lots, including cars being worked on in the garage.

Garagekeepers Insurance

Garagekeepers insurance is more equivalent to the physical damage portion of a commercial auto policy. In the instance above where your employee crashes a customer’s car into a third party, the garage liability would step in to cover damage to the third party and its driver, but would not do anything about the customer’s car in your care. This is where garagekeepers insurance steps in; it will cover the cost of repairs to the customer’s car.

There are three different coverage types within garagekeepers coverage:

Legal Liability

The most common coverage option, garagekeepers on a legal liability basis only provides coverage for damage to vehicles in your care, custody, or control when caused by your (or your employee’s) negligence.

Direct Primary

This option is slightly less common as it is broader than legal liability. This will cover damage to customer vehicles whether you are found negligent or not – the policy will cover weather damage, theft, etc.

Direct Excess

The least common option, this form offers coverage for the customer’s vehicle regardless of legal liability, the same as direct primary; however, the difference in this coverage is that the form will only pay in excess of any other collectible insurance.

To sum up, if you are in the auto business, it is always going to be best to have both Garage Liability and Garagekeepers insurance to cover every side of your business.

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