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Section I – Covered Autos Coverages

E. Garagekeepers Coverage

Actual Policy Language


E. Garagekeepers Coverage

E. Garagekeepers Coverage

This coverage is a form of bailee liability designed to cover damage to autos belonging to others while in the insured's care.

The care, custody and control exclusions in the liability sections create the need for this coverage.

The wording shown here provides garagekeepers coverage only on a legal liability basis. The insured must be negligent in causing the damage before the policy will respond. Broader coverage is available so that the policy would respond regardless of negligence (direct primary or direct excess) by checking a box in Item Five of the Declarations and charging an additional premium.

With the direct excess option, coverage is excess over any coverage provided by the customer’s insurance, but could be used to cover the customer's physical damage deductible, subject to the auto dealer’s deductible on the garagekeepers coverage.

It might also be used to pay for a substitute vehicle while the customer's auto is being repaired, since the definition of "loss" includes loss of use for the purpose of garagekeepers coverage (see Definitions). If the customer has no direct insurance to cover any part of the loss, garagekeepers coverage with the excess option becomes primary.

In no event should the election of the direct excess option, for which the insured is charged additional premium, provide less coverage than that provided by the legal liability coverage in the basic policy. If the insured is negligent, the garagekeepers coverage should pay the full amount of the claim (subject to the deductible) without consideration for the customer's own insurance.

With the direct primary option, any "loss" to the customer's auto, as long as damage is caused by a covered peril, will be covered without regard either to the insured's negligence or the customer's own insurance.

See technical report Garagekeepers Options on the Auto Dealers Coverage Form.

1. Coverage

a. We will pay all sums the "insured" legally must pay as damages for "loss" to a "customer's auto" or "customer's auto" equipment left in the "insured's" care while the "insured" is attending, servicing, repairing, parking or storing it in your "auto dealer operations" under: 

1.a. Coverage

This insuring agreement establishes the coverage as liability coverage, requiring the insured to be liable for damages to an auto in his care.

Symbol 30 is the only appropriate symbol to designate covered autos in the Declarations (see Description of Covered Auto Designation Symbols), and in fact the language used for Symbol 30 mirrors the definition of customer’s auto.

Coverage on auto equipment is included as well, subject to the items specifically excluded such as tape decks and sound reproducing and receiving equipment (See Exclusions below). Coverage for some electronic equipment in customers’ autos is available by attaching endorsement CA 99 59 (Garagekeepers Coverage – Customers’ Sound Receiving Equipment).  Coverage on other equipment and non-auto-related items left in an auto is not available under the auto dealers coverage form. A separate bailee liability policy might be used to provide the coverage if desired.

Since the definition of “loss” includes any resulting loss of use (see Definition), garagekeepers coverage would pay for rental of a substitute vehicle while damage to the customers' auto is being repaired. 

(1) Comprehensive Coverage

From any cause except:

(a) The "customer's auto's" collision with another object; or

(b) The "customer's auto's" overturn.

(2) Specified Causes Of Loss Coverage

Caused by:

(a) Fire, lightning or explosion;

(b) Theft; or

(c) Mischief or vandalism.

(3) Collision Coverage

Caused by:

(a) The "customer's auto's" collision with another object; or

(b) The "customer's auto's" overturn. 

Coverage Options

Garagekeepers coverages are selected in the same manner as dealers physical damage coverage.

The specified causes of loss in the garagekeepers section includes fewer causes of loss compared to those available in the physical damage section, since it does not include "acts of God" such as wind, hail, earthquake and flood.

Comprehensive coverage, on the other hand, includes those perils and all other risks of loss not excluded. This may be more than the garage insured really needs, especially when direct primary coverage is selected.

For example, direct primary comprehensive coverage would pay for hail or tornado damage to customers' autos unlucky enough to be on the premises at the time of a storm. However, there are good reasons why a garage owner should carry comprehensive coverage; damage caused while the auto is being worked on would be covered. 

b. We have the right and duty to defend any "insured" against a "suit" asking for these damages. However, we have no duty to defend any "insured" against a "suit" seeking damages for any loss to which this insurance does not apply. We may investigate and settle any claim or "suit" as we consider appropriate. Our duty to defend or settle ends for a coverage when the Limit of Insurance for that coverage has been exhausted by payment of judgments or settlements.

b. Defense

Selection of a direct coverage option (primary or excess) does not eliminate this provision for defense if the insured is sued by the owner of the damaged auto or if the owner's insurer attempts to subrogate. 

2. Who Is An Insured

The following are "insureds" for "loss" to "customer's autos" and "customer's auto" equipment:

a. You.

b. Your partners and their spouses, if you are a partnership, but only with respect to the conduct of your "auto dealer operations".

c. Your members, if you are a limited liability company, but only with respect to the conduct of your "auto dealer operations". Your managers are also "insureds", but only with respect to their duties as your managers.

d. Your "executive officers" and directors, if you are an organization other than a partnership or limited liability company, but only with respect to their duties as your officers or directors. Your stockholders are also "insureds", but only with respect to their liability as stockholders.

e. Your "employees", other than either your "executive officers" (if you are an organization other than a partnership or limited liability company) or your managers (if you are a limited liability company), but only for acts within the scope of employment by you or while performing duties related to the conduct of your "auto dealer operations".

2. Who Is An Insured

The named dealership entity and its executives and employees are considered insureds for garagekeepers coverage.

3. Coverage Extensions

The following apply as Supplementary Payments. We will pay for the "insured":

a. All expenses we incur.

b. The cost of bonds to release attachments in any "suit" against the "insured" we defend, but only for bond amounts within our Limit of Insurance.

c. All reasonable expenses incurred by the "insured" at our request, including actual loss of earnings up to $250 a day because of time off from work.

d. All court costs taxed against the "insured" in any "suit" against the "insured" we defend. However, these payments do not include attorneys' fees or attorneys' expenses taxed against the "insured".

e. All interest on the full amount of any judgment that accrues after entry of the judgment in any "suit" against the "insured" we defend; but our duty to pay interest ends when we have paid, offered to pay or deposited in court the part of the judgment that is within our Limit of Insurance.

These payments will not reduce the Limit of Insurance.

3. Coverage Extensions

Except for bail bonds, these are the same supplementary payments as are covered in the liability section. Payments under this section do not reduce the limit of insurance.

4. Exclusions
4. Exclusions

a. This insurance does not apply to any of the following:

a. Causes of Loss Exclusions

(1) Contractual

Liability resulting from any contract or agreement by which the "insured" accepts responsibility for "loss". But this exclusion does not apply to liability for "loss" that the "insured" would have in the absence of the contract or agreement.

(1) Contractual Liability

An insured should be cautioned against entering contracts in which he agrees to be responsible for damage regardless of legal liability. However, if there is such an agreement, this exclusion does not relieve the carrier from coverage when the insured is actually negligent in causing loss to the auto.

(2) Theft

"Loss" due to theft or conversion caused in any way by you, your "employees" or by your stockholders. 

(2) Theft by Employees

This loss could be covered with employee dishonesty coverage.

(3) Defective Parts

Defective parts or materials.

(4) Faulty Work

Faulty "work you performed".

(3) and (4) Defective Parts & Faulty Work

If the auto is still in the insured's care, damage which occurs while working on the auto would be covered, but not the cost of repairing any faulty work which has already been done nor the expense of replacing defective parts.

Once the auto is no longer in the insured's care and leaves the premises, any resulting damage would be covered by the garage liability section as a completed operations exposure subject to applicable exclusions, but not damage to the product or correction of completed work. 

b. We will not pay for "loss" to any of the following:

(1) Tape decks or other sound-reproducing equipment unless permanently installed in a "customer's auto".

(2) Tapes, records or other sound-reproducing devices designed for use with sound-reproducing equipment.

(3) Sound-receiving equipment designed for use as a citizens' band radio, two-way mobile radio or telephone or scanning monitor receiver, including its antennas and other accessories, unless permanently installed in the dash or console opening normally used by the "customer's auto" manufacturer for the installation of a radio.

(4) Any device designed or used to detect speed-measuring equipment, such as radar or laser detectors, and any jamming apparatus intended to elude or disrupt speed-measuring equipment.

b. Property Exclusions

To be covered, tape decks and other sound reproducing equipment must be permanently installed (e.g., bolted into the vehicle).  CB and 2-way radios and telephones must be permanently installed in the dash or a console normally used by the manufacturer. To cover these items when they are permanently installed in the vehicle but not by the manufacturer, use endorsement CA 99 59 (Garagekeepers Coverage – Customers’ Sound Receiving Equipment). 

These exclusions are not the same as the equipment exclusions in the physical damage section. 

Some insurance companies may be willing to delete this exclusion for an additional premium or provide coverage on a bailee policy. 

c. We will not pay for "loss" caused by or resulting from the following. Such "loss" is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the "loss".

(1) War, including undeclared or civil war;

(2) Warlike action by a military force, including action in hindering or defending against an actual or expected attack, by any government, sovereign or other authority using military personnel or other agents; or

(3) Insurrection, rebellion, revolution, usurped power, or action taken by governmental authority in hindering or defending against any of these.

c. War Exclusion

Endorsement CA 01 97 (Texas Changes) adds an exclusion for loss due to seizure of a covered auto under a controlled substance law.

5. Limit Of Insurance And Deductibles

a. Regardless of the number of "customer's autos", "insureds", premiums paid, claims made or "suits" brought, the most we will pay for each "loss" at each location is the Garagekeepers Coverage Limit Of Insurance shown in the Declarations for that location. Prior to the application of this limit, the damages for "loss" that would otherwise be payable will be reduced by the applicable deductibles for "loss" caused by:

(1) Collision; or

(2) With respect to Garagekeepers Coverage Comprehensive or Specified Causes Of Loss Coverage:

(a) Theft or mischief or vandalism; or

(b) All perils.

b. The maximum deductible stated in the Declarations for Garagekeepers Coverage Comprehensive or Specified Causes Of Loss Coverage is the most that will be deducted for all "loss" in any one event caused by:

(1) Theft or mischief or vandalism; or

(2) All perils.

c. To settle a claim or "suit", we may pay all or any part of the deductible. If this happens, you must reimburse us for the deductible or that part of the deductible that we paid.

5. Limit of Insurance and Deductible

The limit and deductibles for each location is shown in Item Five of the Declarations.  The insured chooses in Item Five whether the deductible applies just to theft, mischief and vandalism, or to all perils.