Garagekeepers Coverage

Garagekeepers Coverage Helps Cover Liability to Cars Left in Possession of a Business

Garage Liability Insurance Coverage and Garagekeepers Coverage are two confusing types of insurance policies. If you as a business owner feel overwhelmed when trying to determine which is best for your business, you are not alone. These coverages are difficult to understand not only for most business owners looking to purchase the coverage, but also for many agents and customer service representatives who are looking to service and sell the policies. The main difference between garage liability and garagekeepers coverage is the difference between Liability Insurance and Physical Damage Insurance. Garage Liability Insurance covers the insured’s liability for operations and Garagekeepers Coverage covers damage to a customer’s vehicle. All businesses with garage risks need both coverages to properly insure their business. In this article we are going to examine the specifics of Garagekeepers Coverage.

Car Mechanic working under the hood.

What Exactly is Garagekeepers Coverage

According to the International Risk Management Institute, Garagekeepers coverage is, “Coverage provided under a garage policy for auto and trailer dealers, particularly those dealers that maintain a service department or body shop, for liability exposures with respect to damage to a customer’s auto or auto equipment that has been left in the dealer’s care for service or repair”.  In layman’s terms this type of insurance is similar to a form of bailee liability where the purpose of the policy is to protect the client’s car, truck, or motorcycle while it is in the possession of the business. Policies differ from carrier to carrier, but a normal policy covers damages related to fire, theft, vandalism, or collision.

Car mechanis working on the frame of a car near a wheel.

3 Parts of Garagekeepers Coverage

There are three main parts to this coverage that a business owner should speak with their agent about when adding this policy to their Business Owner’s Package. Those three parts are legal liability, direct primary, and direct excess. Legal Liability covers mechanic’s negligence. If damage is cause to a vehicle while in possession of the business, your business is covered. Two prime examples of this type of liability are when a mechanic damages a car while working on it or driving the car around the property. The other time this liability arises is when an employee forgets to lock the vehicle overnight and there is theft or vandalism as a result. Direct Primary means the client’s vehicle is protected regardless of whether the damage is due to negligence, theft not attributed to negligence, or damage due to extreme weather. Direct Excess is a type of coverage that is similar to “direct primary” coverage, but the difference is Direct Excess is paid only in excess of any amount collectible if the insured is not held legally liable. Like Direct Primary, Direct Excess protects a client’s vehicle regardless of fault.

Car Racing Mechanics preparing for a race.

Common Exclusions to Garagekeepers Coverage

Some common exclusions to a traditional Garagekeepers Coverage include: damage or theft of stereo equipment, loss of CD’s left in the backseat of a vehicle, loss of cellphones, scanners, or mobile radios, loss or damage to radar detection devices, defective parts installed on a vehicle, and even faulty work done by a mechanic.

General Liability Insurance

General liability insurance protects a company’s assets and pays for obligations. For example, it covers medical costs incurred if someone gets hurt on your property or when there are property damages or injuries caused by you or your employees. Liability insurance also covers the cost of your legal defense and any settlement or award should you be successfully sued. Generally, these include compensatory damages, non-monetary losses suffered by the injured party, and punitive damages. General liability insurance can also protect you against any liability as a tenant if you cause damage to a property that you rent, such as by fire or other covered loss. Finally, it can also cover claims of false or misleading advertising, including libel, slander, and copyright infringement.

General Liability Insurance

Getting liability insurance is a wise investment that doesn’t cost much – annual premiums could range from $425 and up on your line of business and coverage needs. That’s certainly a lot less than the thousands, if not millions, of dollars you may need to spend fighting your case in court. General liability insurance can be purchased on its own, but it can also be included as part of a Business Owner’s Policy (BOP) which bundles liability and property insurance into one policy. If you have a BOP, check it to see what your liability coverage limit is. You may find that it is quite low, in which case you may need additional coverage through a separate policy. There are specific liability products catered to contractors that you can add some tools and equipment coverage making it into a BOP that costs the same if not better than just getting liability coverage by itself. The coverage you need depends on the type of business you are in and the perceived risk associated with it.

How general liability insurance works is the same as many insurance plans, your general liability policy will outline the maximum amount the insurance company will pay against a liability claim. So, if your small business gets sued for $250,000 for medical costs associated with an injury caused by a worksite hazard, plus an additional $100,000 in legal fees, but your coverage maxes out at $300,000, then you are responsible for paying the difference of $50,000. If you are on the higher end of the risk scale and already have general liability insurance, you can also opt for umbrella insurance that increases your coverage limits. This will cover you in situations in which you’re worried that your existing coverage won’t cover all your costs should someone file and win a claim against you. The most commonly asked limit we have found is $1,000,000 per occurrence with a $2,000,000 aggregate.

Find out if your business needs a commercial umbrella policy at myinsurancequestion.com

 If an incident occurs that may lead to a claim, you should notify your insurance company or agent immediately. Be prepared to explain what has happened in detail including the time, date, the names of any witnesses, and any other pertinent information.

Remember General Liability Insurance just like all other kinds of insurance are designed to help you in a time of need. Make sure you review your policies with your insurance agent on a regular basis.  This can help you make sure you are up to date on coverages and that you have the limits that best suit your business. This is important because your business has probably changed a great deal from the first time you took a policy out when you open your doors.

Liquor Liability Insurance

Get the best answers to your liquor liability insurance questions at MyInsuranceQuestion.com

Liquor liability insurance is a coverage that all restaurants, bars, clubs or any establishment that sells alcohol needs to have in place. This coverage is very important because when you sell or serve alcohol you open yourself up to be liable for damages or injuries caused by intoxicated people. These types of damages could include fights, automobile accidents, etc. When we first think of who is at fault the initial reaction is to blame the intoxicated person, but what happens if an accident occurs and someone is severely injured or harassed. The victim or victim’s family may get a lawyer involved and then all of sudden they will look at all the events that led up to the incident. If the establishment played a part in serving a clearly intoxicated person they could be held liable and be sued.

Liquor Liability Insurance is a coverage that protects your business from personal injuries and property damages resulting from a liability lawsuit. The good thing about this coverage, is that it covers the cost to defend. Since legal fees and court cost generally are high even if you are found not to be held liable. One key that you want to make sure of is that assault and battery coverage is included in your liquor liability insurance coverage.  Since this would cover fights that occur at your establishment or if a bouncer handles a situation in an aggressive manner resulting in injury to the person they are making leave. In some policies it will even cover someone that is not involved, but the bouncer pushes through them to get to the fight.

What about Underage drinking? Underage drinking is something that all establishments are aware is illegal. It is very important to check ids, train staff to do so and including training on how to handle fake ids. This is very important because coverage is EXCLUDED for anything resulting from an underage person causing injury or a fatal accident resulting out of drinking at your bar, restaurant, etc. This could essentially put you out of business since you are picking up the entire cost of the incident when it involves a minor who obtained alcohol at your establishment.

Where is this coverage located in my policy or how can I add it? Most states require this coverage if you are serving alcohol at your establishment. Because of this it is an easy coverage to get and it does come at varying levels with different limits of coverage. You can purchase the coverage on a stand-alone basis. This is not always the most cost effective.  Probably the best place to add the coverage is with your general liability or business owners’ insurance policy if at all possible. It is generally cheaper if you package it with those policies. Depending on the % of alcohol sales though you may have to purchase it separate from those. An example of this would be a bar with 100% alcohol sales usually has to purchase separately.

There are companies that specialize in this coverage so it is good to look around before purchasing or when shopping your insurance coverage every few years. You can get this coverage for special events such as weddings, parties, festivals, etc. I recommend contacting your agent or insurance professional for any help.