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But garage liability claims often occur after the work is preformed and the vehicles is released to the customer. This exposure typically falls under completed operations but may occur as a result of a product sold that is deemed to be defected, hence product liability is generally also afforded. Other liability exposures include personal and advertising injury, however these exposures are typically added back by endorsement.

Physical damage to the customers’ vehicles is ordinarily excluded, therefore garage keepers liability is often necessary to secure. Garage keepers protects against damage or loss resulting from either comprehensive and/or collision. Some carriers will limit the comprehensive to a named peril basis only providing coverage on a limited basis such as fire and theft. Most carriers provide protection on a legal liability basis which will generally protect if the garage is legally liable and may exclude coverage for accidents beyond the control of the business. Hence garage keepers primary coverage generally provides protection regardless of fault.

How is the cost of these policies determined?

Garage liability policies are most often rated based on payroll, however sales may be a factor. Payroll is often calculated on a percentage of time each employee works during the week then multiplied by the number of weeks worked in the year. An example would be if a full timer was to work the entire year; their payroll would be 100% or $ 100/week times 52 weeks amounting to $ 5200. This number is added to the other employees to determine the aggregate payroll. If there are four full time employees and one part time, the figures may look like this:

4 F/T’s x $ 5200 each = $ 20,800 + 1 P/T @ $ 2600 = $ 23,400 total. This amount is then multiplied by a factor set by the carrier to determine the garage liability premium. Note, this amount generally does not include the garage keepers liability exposures or any liability insurance relating to the sales or operations of owned or hired vehicles.

Garage keepers liability insurance is most often rated by the aggregate value being insured usually broken down by the amount of comprehensive and a separate amount for the collision. Any owned vehicles, such as a station car or a tow truck is rated by the usage, the year, make, and model, value, radius, etc. Dealer and transporter plates can be calculated by the number of plates, or some other factor.

An umbrella policy typically adds an additional layer of liability coverage over the underlying or base limits. A follow form umbrella generally matches the coverage including the limitations and exclusions whereas an excess liability policy defines what is covered which can deviate from the underlying policy

Commercial Property Insurance

Similar to commercial general liability policies, commercial property policies typically cover perils on a named basis. Therefore it is important to determine what risks are prevalent to the establishment. These policies are generally written on either a basic, broad, or special basis. The first two defines which perils are covered, while the latter covers all direct physical losses except for the exclusions. Again it is important to determine every aspect of what perils are inherent to the business.

Workers’ Compensation & Statutory Disability Insurance

All states have workers’ compensation laws that require organizations to provide coverage or a means to pay for it’s employees claims in the event of an on the job injury or illness. Please refer to the insurance department or the department of labor in the state for which the business operates and the employees are located or work in. Statutory disability may also be required which provides coverage for off the job injuries and illnesses.

Insurance Programs for the Auto Repair Industry

Auto & Truck Repair Centers

Protecting the assets of an automobile - truck repair shop requires a certain level of knowledge relating to inherent exposures unique to the industry. These exposures include the risk of physical damage to the vehicles while in the care, custody, and control of the shop to the pollution cleanup costs associated to leaky underground storage tanks. Therefore in order to determine how to protect these risks, an assessment should be made to analyze which exposures are necessary to cover.

Besides the general questions relating to the value of the contents or the amount of liability, the following list will provide a basis to help evaluate the nature of the repair or auto body shop:

What type of vehicles are worked on?

How many vehicles are kept on the premises?

What is the average value of each vehicle?

Where are vehicles stored overnight?

Is work preformed on a wholesale basis?

Are vehicles towed? If so, when, how, and for who?

Who tests drives the vehicles?

Do employees use their own cars?

Does the shop maintain a dealer’s license?

Is dealer physical damage coverage needed?

Are transporter plates used?

Are the tools owned by the shop or the mechanics?

How are hazardous materials stored?

How are pollutants disposed?

Garage Liability & Umbrella Insurance

Garage liability insurance provides coverage to help protect the financial interest of the shop against third party liability losses. These losses would typically result from negligent acts or accidents. Generally the scope of coverage extends to the operation of the business, the premises it occupies, the products it sells, and the work preformed after it’s completed also known as completed operations. The operations hazards are those exposures occurring during business operation such as providing protection against third partly liability losses form driving a non-owned vehicle. Premises liability protects against trip and fall claims at the described location.

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