Multiple alarms struck for auto repair shop fire in Bethel…3 cars and handmade tools destroyed by fast moving fire…damage estimated to be at least $300,000.
This was the headline in a news story published earlier this month when a two-alarm blaze destroyed an auto repair shop and left nothing but charred antique cars behind. Among the cars destroyed were two Mercedes along with a Porsche.
The loss on just the Mercedes could run in excess of $120,000 with the Porsche adding another $30,000 to the total.
It is in this instance that the value of a Garagekeepers Liability policy comes into play. If this auto repair shop only has a BOP policy or Garage Liability they are fully exposed to the losses of the vehicles that were in their “care, custody and control.”
Garagekeepers is more like auto coverage and protects shop owners while vehicles are in the care, custody and control of the shop.
This is probably the most under utilizedinsured coverage because the garage/shop owner does not always realize the difference between Garage Liability and Garagekeepers Liability and often only want to carry a minimum limit.
The big question is how much Garagekeepers coverage does the insured need? One way to decide on a limit is to determine the number of vehicles normally kept on the premise at any point in time and the average value of those vehicles.
If we were to take the repair shop owner from this news story for example, and assume that his shop has five service bays and typically has10 vehicles in their care, custody or control at any given time, you would use that to estimate the amount of coverage needed.
Let’s assume that the average value of a vehicle they work on is $50,000. If a catastrophic loss occurred, like a fire, the minimum coverage recommended would be $500,000 ($50,000 value per vehicle x 10 vehicles = $500,000).
Working with the owner to help them calculate the needed amount of coverage will make the coverage difference easier for them to understand.
Buying adequate coverage that protects the owner in the event of a loss to a customer’s vehicle while it is in the custody and control of the shop, along with a Garage Liability policy, provides a comprehensive coverage solution.
To learn more about this coverage feel welcome to contact Gail or Nancy.