Garage Liability and loaner vehicles

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Rob
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Garage Liability and loaner vehicles

Post by Rob »

Do you see any potential problems with a repair shop who provides his owned vehicles as loaners to customers when repairing their vehicles? He has a garage liability and gkll policy as well as a commercial auto policy for owned vehicles. I'm going to read the policies carefully but I wanted to see if anyone had any input. My first reaction is that the insured is putting his experience factor at risk and second I'm wondering if there is a potential problem with any "other insurance" provisions.
crossins
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loaner vehicle

Post by crossins »

No coverage problem but your auto underwriter may have some issues with loaners.
MCMMUrph
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Re: Garage Liability and loaner vehicles

Post by MCMMUrph »

Question: My customer has a GK/GL policy. Customer of his is dropping off her tire at the shop and is turning around in the his parking lot. One of his employees backs out of the bay and hits the customer turning around who just dropped off the tire.
I have no coverage for her. Has anyone dealt with this before?
d's insurance store
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Re: Garage Liability and loaner vehicles

Post by d's insurance store »

The most recent post brought back nasty memories...in my first year of independent agency ownership, the owner of a used motorcycle shop near my office dropped in and requested a quote for GK/GL without prior. This is a category that I had no experience with.

I relied on my MGA underwriter who had a GK/GL specialist to assemble a quote with coverage options, didn't really know what to ask, but had a proposal anyway. The shop owner thanked me, said he didn't have the money and left. Three months later, the shop owner showed up with the quote and said he needed coverage right away because he was sponsoring a charity ride that weekend. On a Friday, seeing commission dollars that felt pretty hefty, I kept the MGA person from leaving early, and got coverage bound after making some premium lowering changes to the quote. About 2 weeks after binding, and after spending the commission, a big, thick policy arrived and I delivered it to the insured, without going through it with a fine tooth comb, and in fact, I wouldn't know what to be looking for anyway because I'd never handled this line of business before.

Everything was fine until just after the first renewal, when the insured presented me with a pending claim. The claim was filed and then rejected because although collission coverage had been requested as part of the quote, the MGA, in their haste to get it bound, had failed to place it as part of the coverage...and they also had not charged for it either.

Well, I screamed 'E&O' at the MGA, as I and they had the coverage request from the original docs. The MGA pushed back and said it was my responsibility to check for proper coverage when the policy was delivered. I contacted my E&O people and they said the MGA was probably 80% responsible, but also pointed out that the shop would first have to sue me and I would have to sue the MGA and it would get really ugly and drawn out, and besides, my coverage had a $5K deductible anyway, so the E&O people advised me to try and negotiate my own settlement with the insured.

Long story short, I negotiated with the shop for a $5K settlement, kept it off my E&O record and vowed there and then, I was NEVER going to get involved in coverage areas that I couldn't explain and had no knowledge of...and I've kept true to that after 15 years.

So, when I read about a lack of coverage in a Gk/GL policy, I could only smirk wisely. I feel for you...but this kind of coverage is best left to those who do it on a specialized basis everyday and not to some generalist trying to get a commission check on a slow day.
Rob
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Re: Garage Liability and loaner vehicles

Post by Rob »

MCMMUrph wrote:Question: My customer has a GK/GL policy. Customer of his is dropping off her tire at the shop and is turning around in the his parking lot. One of his employees backs out of the bay and hits the customer turning around who just dropped off the tire.
I have no coverage for her. Has anyone dealt with this before?
Can you be more specific? What coverage was on the Garage policy? Was a claim denied or you just know there is no coverage? Who was deemed to be at fault and legally liable? Was the Garagekeepers portion written as Garagekeepers Legal liability or Garagekeepers Direct Primary?
dtay
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Re: Garage Liability and loaner vehicles

Post by dtay »

Most of my business is Auto Dealers and Repair Shops. If your insured has a Garage Liability policy, this is considered property damage, and will be paid as a liability claim. The Garagekeepers coverage will only pay for physical damage to a covered auto in your insured's care, custody, or control.
Rob
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Re: Garage Liability and loaner vehicles

Post by Rob »

dtay wrote:Most of my business is Auto Dealers and Repair Shops. If your insured has a Garage Liability policy, this is considered property damage, and will be paid as a liability claim. The Garagekeepers coverage will only pay for physical damage to a covered auto in your insured's care, custody, or control.
Yeah, I have no idea why the OP says he has no coverage for her.
FurriePrincess
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Re: Garage Liability and loaner vehicles

Post by FurriePrincess »

He may have a deductible that is more than the damage to the customer's vehicle. Or... no coverage at all or an excluded driver. GKLL does require negligence on the part of the shop... which this would seem to be.
Rob
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Re: Garage Liability and loaner vehicles

Post by Rob »

FurriePrincess wrote:He may have a deductible that is more than the damage to the customer's vehicle. Or... no coverage at all or an excluded driver. GKLL does require negligence on the part of the shop... which this would seem to be.
Yes, however this would not be claimed under the GKLL, rather the Garage Liability portion because the damage was not the a vehicle in their care/custody/control. Yes, it could be a deductible or an excluded driver but I would think the OP would know about this since he wrote the policy.

OP should obtain the actual claim denial letter and see what the carrier's reasoning is.
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