Garagekeepers Insurance: Protecting Customer Vehicles
What is Garagekeepers Insurance?
Garagekeepers insurance, sometimes referred to as bailee coverage, is specialized coverage designed for businesses that take possession of another party’s vehicle. It covers vehicles that are in your care, custody, or control (that you don’t own) while they’re being repaired, serviced, or stored at your business. This type of insurance is crucial for shops as it protects against physical damage that may occur to a customer’s vehicle, and typically includes coverage for accidental damage, fire, severe weather, theft, and vandalism. However, it doesn’t cover damage caused by faulty workmanship, parts, or out-of-date warranties, which is typically covered under garage liability.
When reviewing or building out your garage insurance policy, you can expect to have a deductible with this coverage. A deductible is what you pay out of pocket in the event of a covered loss. Deductibles under garagekeepers coverage are typically set up per vehicle, and with a per claim/event limit. The per event limit helps minimize your shop’s out of pocket exposure in the event many customer’s vehicles are damaged during a single incident.
Why is Garagekeepers Coverage Important?
Imagine a scenario where a customer’s vehicle is damaged while parked in your shop by a fire. Or you get in an at fault accident while test driving the vehicle, damaging the customer’s front bumper. Without this coverage, you could be held financially responsible for the cost of repairs or replacement of the car.
For shop owners, having garagekeepers coverage is not just good practice; it’s often a requirement from customers and a key part of maintaining trust and professionalism in the industry.
Claim Examples That May Qualify Under Garagekeepers Insurance:
- There was a flash flood and a customer’s vehicle, while in your possession, has water damage from the flood.
- Thieves break into your shop and steal a customer’s vehicle.
- While backing the customer’s vehicle out of the bay, you clip the side of your building knocking off the side view mirror.
- A customer’s vehicle was parked in your lot waiting to be released when a hailstorm causes damage to the vehicle.
Garage Liability Insurance: Covering Business Operations
What is Garage Liability Insurance?
Garage liability insurance is essential for any auto repair business as it is designed to cover claims of negligence associated with the daily operations of your shop, such as the work performed on vehicles.
Unlike garagekeepers insurance, which specifically provides physical damage coverage for customer vehicles, garage liability insurance addresses broader operational risks, and protects against claims made by third parties for bodily injury or property damage resulting from your work being performed at the shop on customer vehicles.
When building an insurance policy for a garage business, garage liability should be part of a general liability policy.
Why is Garage Liability Insurance Essential?
Your business is exposed to various risks every day, and garage liability insurance helps cover these potential liabilities and from devastating financial claims and lawsuits. For shop owners, this coverage acts as a safety net against negligence in the work being performed and is often considered the foundation of a solid insurance plan for any business doing work on customer vehicles.
Not all policies are equal, as most basic general liability policies exclude coverage for claims related to the work being done on customer vehicles. So, it’s critical that you review your shop’s policy with an insurance provider familiar with your business type to ensure your policy includes this coverage.
Claim Examples That May Qualify Under Garage Liability:
- While changing a customer’s oil, an employee leaves the drain plug loose, resulting in damage to the vehicle’s engine.
- The lug nuts on a tire aren’t fully tightened, and while the customer is driving the vehicle home, a tire flies off their car damaging the vehicle, and a vehicle nearby.
- One of your mechanics improperly installs a new transmission in a customer’s car. The faulty installation causes the transmission to fail, leading to further damage and work.
A Summary Comparing the Two Types of Insurance
Garagekeepers Insurance: Focuses specifically on protecting customer vehicles in your care, custody, or control.
Garage Liability Insurance: Offers protection against risks, including bodily injury and property damage, because of negligence related to your garage operations and work performed.
Any business working on customer vehicles needs to consider both coverages to fully protect the business. Quality matters in the work you do on your customers’ vehicles, and it should also matter in the insurance provider you choose, and the coverage you include in your garage insurance policy.
Additional Considerations
Who you work with, and selecting the right insurance coverage for your auto repair or collision shop is key to the long-term success of your business. Here are some things to consider when evaluating your shop’s insurance:
1. Evaluate Your Risks: Identify the types of risks your business faces daily. This will help you determine the appropriate levels of coverage, limits, and deductibles.
2. Consult with an Insurance Professional: An expert experienced with your business type can provide tailored advice based on the type of work your shop provides, the size of your shop, and any unique needs you might have. Though online quoting may be enticing, you run the risk of coverage gaps which can come back to hurt you long term. We recommend choosing a trusted advisor that understands your industry and is there to help your business grow and thrive.
3. Review Your Policies Regularly: As your business grows and evolves, so should your insurance coverage. Regularly review and update your policies to ensure you remain adequately protected. At minimum, you should review your policy annually as you approach your insurance renewal date.
Conclusion
Understanding the distinctions between garagekeepers insurance and garage liability insurance is essential for any shop owner, whether you do mechanical work, body work, or are a general service or maintenance shop. Each type of insurance plays a unique role in protecting your business against various risks, making certain you are properly safeguarded.
At Intrepid Direct Insurance, we specialize in providing customized insurance solutions for auto repair and service businesses, offering you the expertise and support you need to keep your shop running smoothly and stress-free. Your peace of mind is our priority, and we’re here to help you navigate the complexities of insurance with ease.
