How Wholesale Garage Liability Insurance Works - Broadened Coverage

Partnering with a wholesale garage liability insurance provider allows retail agents to gain access to a wider range of markets. Wholesale providers also offer expertise and knowledge in unique risks surrounding garage coverage that retail agents may not possess, enabling them to offer comprehensive and customized coverage to their clients.

Here we look at how wholesale garage liability insurance works and how broadened insurance offers your clients peace of mind.

Garage Liability vs. Garagekeepers Insurance

Garage liability? Garagekeepers? Do you know the difference between these terms? If not, you’re not alone. They tend to be confusing, at best. Not only for your clients but for most agents and CSRs as well.

In a nutshell, the difference between garage liability coverage and garagekeepers coverage is the difference between liability insurance and physical damage insurance. The first covers the insured’s liability for operations and autos, and the other covers damage to customers’ vehicles. All garage risks need both coverages to properly insure their loss exposures. The basics apply to dealerships as well as service risks.

Think of it this way:
A customer who purchased a vehicle from your client brings it back to the lot with a mechanical issue. A mechanic takes the vehicle for a test drive to see what’s going on, and in the process, hits another vehicle. He totaled the other vehicle and injured its driver. He also totaled the customer’s car he was test-driving.

The other vehicle and its driver are covered by the garage liability policy. The customer’s vehicle is covered by the garagekeeepers.

Now, while this seems pretty cut and dried, the intricacies in the different forms, wording, and interpretations are where confusion can set in.

When Might I Need Excess Limits or Broadened Coverage?

If your clients are concerned that they are at higher risk for events likely to see their losses exceed basic coverage, excess limits premiums can help. Excess limits cover losses beyond the basic liability limits in typical garage insurance contracts. Introducing an excess coverage rider that kicks in when your clients experience high damage is one possible solution for higher-risk garages and dealers. Broadened coverage applies to rare events that wouldn’t impact the average garage or dealer but, for some reason, pose a serious risk to your client.

Types of Vehicles That Are Normally Excluded From Regular Garage Liability

Typical garage insurance tends to exclude several types of vehicles that are less commonly stored on garage properties, including:

ATVs
ATVs wouldn’t be found at the average garage shop but instead would be more common on ATV lots. As a result, ATV dealerships and garages have special insurance coverage that includes this unique type of vehicle. By creating a customized insurance package that specifically lists ATVs, Novatae can include ATV coverage for your clients.

Emergency Vehicles
Garagekeepers’ liability insurance only applies to the vehicles in your care and owned by your customers. Should an emergency vehicle arrive on your property to provide emergency assistance to a customer or employee and incur damage due to your negligence, it would not be covered. Also, as with ATVs, if your clients repair emergency vehicles but did not include them in your coverage, claims related to damages would not be covered. These vehicles require customized insurance provided by a wholesaler like Novatae.

Farm Equipment
Farm equipment falls into a special category, like ATVs. If you do not include farm equipment among the types of vehicles repaired or stored at your garage, damage to that equipment would not be covered. Novatae provides underwriting services to include specific equipment and vehicles likely to be found at your business.

Heavy Trucks
Heavy-duty trucks such as 3-axle tractor-trailer tractors or single-unit dump trucks with a GVWR of over 33,000 pounds are not covered by typical garage liability insurance. With specialty wholesale garage liability insurance, your client’s heavy-duty trucks would be covered.

Recreational Vehicles (RVs)
As with ATVs, RVs are specialty vehicles typically found at RV-specific dealers. As a result, they also require specialty garage or dealer insurance provided by a wholesale insurance company like Novatae.

Other Garage Liability Exclusions

Excluded from coverage would be: expected or intended injury, contractual liability (except “insured contracts”), workers' compensation, employee indemnification and employer’s liability, fellow employee, leased autos (except autos rented to customers when servicing their vehicles), as well as care, custody or control. Also excluded from coverage is: pollution, racing, watercraft or aircraft, defective products, work you performed, loss of use, products recall, war, and liquor liability. Note “personal injury” or “advertising injury” coverages would have to be added by endorsement.

Pay close attention to the care, custody, or control exclusion. It excludes property damage involving property in the insured’s care, custody, or control. Reading that exclusion, it becomes obvious that there is a problem with the customers’ vehicles. Any vehicle left with the garage business for repair, storage, or even involved on a simple test drive is not covered based on this exclusion. Keep in mind that third-party claims caused by the customer’s vehicle are covered, while the vehicle itself is not.

What Other Gaps Can Specialty Garage Liability Insurance Cover?

While you can offer your clients excess limits and broadened coverage, there are specific types of coverage that can help fill gaps in specialty garage liability insurance, including:

1. Umbrella Insurance
Commercial umbrella insurance is an example of an insurance “layer.” It covers costs not covered by liability coverage limits, helping ensure your clients aren’t out of pocket if their coverage is reached. This insurance is always omitted because it is intended to provide an additional layer for basic policies.

2. Dealer’s Errors & Omissions (E&O)
E&O insurance protects against negligent acts your clients commit as well as incidents such as omissions in contracts regarding a quote for repairs or when preparing something like title papers if they sell vehicles. It is not included in typical garagekeeper policies because not all garages deal with contracts. Also, most garages assume they are covered through their basic liability insurance.

3. Dealer’s Open Lot
Dealers Open Lot (DOL) insurance is a custom-built policy available through wholesale insurance providers. This policy provides coverage for physical damage to a fleet of vehicles owned by your licensed auto dealership clients. DOL is not included in garage liability policies because they require customized coverage to meet the specific needs of the dealership.

4. Garagekeepers’ Direct Primary
Garagekeepers’ direct primary coverage applies to damage to the customer's vehicle, even if you caused the damage but took reasonable care to protect the vehicles on your property.

5. Garagekeepers’ Legal Liability
Garagekeepers’ legal liability is the most common garage insurance, covering damage caused by an employee during vehicle repairs or maintenance.  The main point to remember with garage keepers’ legal is that the policy covers physical damage to customers' autos that the insured is legally responsible for, it would not cover acts of god-like hail damage.

Garage Liability with Novatae

The special business scenarios for some of your garage clients require tailor-made insurance policies to address unique needs. Whether it is the type of vehicles they service, the number of risks unique to their business, or simply wanting to include add-ons to fill the gaps that leave them vulnerable to liabilities, we can help. Novatae caters to unique garaging businesses, including:

• ATV / off-road vehicle sales and repair
• Auto repair
• Body shops
• Dealers & service
• Emergency vehicle sales and repair
• Farm equipment repair
• Heavy truck repair
• Mobile auto repair
• RV dealers and repair
• Valet parking

We can customize garage insurance, truck repair insurance, RV repair insurance, mobile auto repair insurance, heavy truck repair insurance packages, and more based on your client’s unique needs.

For more information or to request a quote, click here.

This article is not intended to be exhaustive, nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice.