Garagekeepers Insurance

The coverage applies to customer autos and their equipment left with you for service, repair, parking, storage or washing. It responds to physical loss to that vehicle while it is on your premises or being driven by your employees in the course of the job, and it pays the cost of defending a claim that you caused the damage. Three choices shape every policy:

• The basis. Legal liability, direct excess or direct primary. These are explained below and are the single most important choice on the coverage.
• The causes of loss. Collision, meaning upset or impact with another object, is usually bought by every car wash and repair shop. Other than collision coverage adds fire, theft, vandalism, windstorm, hail, flood and similar events. Specified causes of loss is a narrower version that names fire, lightning, explosion, theft and a short list of others.
• The limit. Stated per location, and on many forms the most paid for any one vehicle is the lesser of the limit and the vehicle's actual cash value.

Legal liability compared with direct coverage

On the legal liability basis, garagekeepers legal liability pays only when you are legally responsible for the damage. If a customer's car is crushed by a hailstorm while parked in your lot and nothing you did caused it, the policy owes nothing, and the customer's own auto insurer pays under their policy instead.

Garagekeepers direct coverage removes the fault question. Written on a direct excess basis, it pays for covered damage whether or not you were at fault, but only after the customer's own auto policy has paid or declined. Written on a direct primary basis, it pays first, regardless of fault and regardless of the customer's insurance. Direct primary costs the most and handles customer relations best, because the business can promise to repair the car and then do it, without asking the customer to call their own carrier, pay their own deductible and risk their own rate.

The choice is a commercial decision as much as an insurance one. A tunnel that washes hundreds of cars a day makes its reputation on how a scratched bumper is handled, and a direct form lets the manager settle it that afternoon.

The forms carry their own exclusions, and several of them catch operators off guard:

• Your own vehicles and inventory. Garagekeepers covers customer property only. A dealer's own stock belongs on a dealers open lot or inland marine coverage for equipment you own or sell, and company vehicles belong on the auto policy.
• Faulty work. The cost of redoing defective repair work is excluded, though resulting damage to other parts of the vehicle may be covered.
• Theft by employees. Theft committed by your own staff is usually excluded and belongs on the crime policy.
• Contractual liability. A promise in a repair order or a sign to pay for any damage, beyond your legal duty, is not covered on a legal liability form.
• Audio, video and electronic equipment. Items not permanently installed are excluded, and many forms cap installed electronics at a small amount.
• Wear, mechanical breakdown and pre-existing damage. None of these is a covered loss, which is why documenting a vehicle's condition at drop off matters.

Car wash forms often add exclusions of their own, removing loose or damaged parts, aftermarket accessories such as roof racks and light bars, and damage to vehicles not suitable for the tunnel. Those exclusions are legitimate when the operator posts and enforces them, and costly when the signs say one thing and the policy says another.

The per location limit should cover the worst single event, not the average claim. For a car wash that means the number of vehicles that could be on the site at once, in the tunnel, the stacking lanes and the vacuum area, multiplied by the value of a typical car, then checked against the most expensive vehicle you regularly see. A fire or hailstorm on a Saturday morning can touch every car in the queue, and that is the scenario the limit has to survive.

For a service shop the calculation is the total value of customer equipment on site at the busiest point of the year. An equipment dealer's shop in harvest season can hold several combines, tractors and sprayers awaiting repair, and a single modern combine can be worth more than a whole row of passenger cars. Some carriers write a separate limit for each building, which matters when customer machines sit in a yard as well as inside.

Deductibles apply per vehicle, usually with a maximum per event. A low per vehicle deductible makes small claims routine, while the per event cap protects the business from paying a deductible on every car in a hailstorm. Car washes with a high volume of small claims often choose to pay those claims themselves under a larger deductible, keeping the policy for serious events and the loss history clean. Premium is rated on the limit, the basis and the causes of loss chosen, the number of locations and, for car washes, the annual car count.

Underwriters price this line from the way the operation handles vehicles, so the submission should answer these questions directly:

• Annual car count or service orders by location, and the share of washes that are full service, where employees drive the car.
• Tunnel equipment make and age, the conveyor type and whether guide rails and correlators are maintained on a written schedule.
• Signage and waivers: what the posted notice excludes, where it is placed and whether attendants pre-inspect for damage.
• Camera coverage at the tunnel entrance and exit, which settles more pre-existing damage disputes than any other control.
• For service shops, key control, after hours storage, fencing and lighting, and who is allowed to road test a customer machine.
• Five years of loss runs, with the number of claims as well as the dollars, since frequency drives this line.

Public and commercial contracts often specify the coverage outright. The State of Oregon's contract insurance clauses call for garagekeepers coverage whenever a contract leaves vehicles in the possession of a garage operation, with a limit stated per location.

Most claims start at the tunnel exit or the service counter. The customer points to a broken mirror, a scraped wheel or a dent, and the outcome depends on what was recorded before the car went in. Operators that photograph or video each vehicle on entry can show whether the damage was already there, and those images are what an adjuster asks for first.

On a legal liability form the adjuster must decide whether the business was negligent. A torn antenna on a car that entered with it extended, past a sign warning to retract it, may be denied. A mirror torn off by a misaligned brush will be paid. The customer is caught in the middle and often sent to their own insurer. On a direct form the question is only whether the loss is covered, and the business can arrange the repair at an agreed shop without first establishing fault.

Larger events work differently. A tunnel fire, a hailstorm or a flash flood across the lot can damage dozens of vehicles at once, and the claim becomes a schedule of cars, owners and repair estimates handled together. We help assemble that schedule and keep the carrier moving, because every customer is waiting on the same adjuster.

Any business that takes temporary control of someone else's vehicle needs the coverage. Two classes we write carry the exposure every day.

Car wash insurance programs treat garagekeepers as a core line rather than an add on. Express tunnels have customers stay in the car while a conveyor pulls it through brushes, cloth and dryers, so the exposures are guide rail damage to wheels and tires, brushes catching mirrors, wipers and antennas, cars rolling off the conveyor, and collisions at the exit when a driver brakes or a car ahead stops. Full service and flex washes add employees driving customer cars to and from the tunnel and through the detail bays, which moves the exposure from equipment to driving. Vacuum and detail areas bring door dings, interior damage and theft of items left in the car. Weather matters too: a line of cars stacked at the entrance during a hailstorm is a single event with many vehicles.

Equipment dealership insurance programs face the exposure in the service department. Customer tractors, combines, loaders and skid steers sit in the shop and on the yard for days or weeks awaiting parts, so fire in the shop and theft from the yard are the severe scenarios, and technicians moving and test driving machines add collision risk. Values are high and concentrated, which is why the limit is the most common gap. A dealer's own inventory is a different exposure on a different form.

Parking operators, auto repair and body shops, detailers, towing companies and hotels offering valet parking carry the same exposure.

• Legal liability only. A form that pays only on fault, sold as the cheapest option, leaving the customer to fight their own insurer after a hailstorm or a fire.
• Collision without other than collision. Fire, theft and weather damage to customer vehicles left uncovered.
• A limit set years ago. Sized for older cars or smaller machines, not today's vehicle values or harvest season volumes.
• Signs that do not match the form. A posted promise to pay for any damage, which a legal liability form will not honor.
• No coverage off premises. Employees road testing or delivering customer equipment beyond the location, outside the form's territory or the limit's location.
• Relying on general liability. Assuming the main liability policy picks up customer vehicles, which the general liability care, custody or control exclusion rules out, and assuming commercial property insurance for the building extends to cars inside it.