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Garage Terms and General Information

TERMS

Dealers

Dealers are operations that sell vehicles. The vehicles may be anything from private passenger autos or trucks, tractors and other commercial vehicles. Generally, only motorized self-propelled vehicles are considered in the dealer rating. Risks that sell trailers are considered to be non-dealers and are considered under non-dealer rating. Dealers are also categorized by the terms Franchised and Non-Franchised

Non-Dealers

Non-Dealers are operations that repair or service vehicles. Non-dealers also include trailer dealers.

Core Coverage Terms and Descriptions

Garage Liability

Garage liability is combination of automobile liability and general liability. The garage liability limit is expressed as: auto liability / other than auto liability / other than auto liability aggregate. An example would be 100,000 / 100,000 / 200,000

Medical Payments

Medical payments coverage may be purchased under the following options:

Uninsured / Underinsured Motorists / Uninsured Motorists Property Damage

This coverage is just like any automobile policy uninsured motorists coverage. With a dealer operation, the rate for uninsured motorists coverage is charged per dealer plate.

Garagekeepers

This coverage provides "physical damage" coverage for customer's autos while in the care, custody or control of the insured. It is a bailee type coverage. Both dealers and non-dealers may need this coverage. The need is obvious for a repair shop operation as the insured would have a customer's auto in his care while performing repairs. A dealer may also need garagekeepers too, since some dealers also perform repair work on non-owned autos as well as test drive a customers auto to determine the quality of the auto in a trade-in situation. Garagekeepers coverage may be purchased for comprehensive or specified perils and collision. Care should be taken in determining the limit of coverage for garagekeepers coverage. A general rule of thumb is to take the average value of customers autos in the insured's custody at any one time, x (times) the maximum number of autos they could have on the lot. For example, the average value of a customer's auto is 10,000 and the maximum number of autos they can have on the lot is 5, then 10,000 x 5 autos equals 50,000 garagekeepers limit. Consideration should also be given to the maximum value per any one auto. Adjust the coverage limit accordingly if, on occassion, the insured has higher valued autos in his possession.

Garagekeepers may also be purchased with three coverage options:

Dealers Physical Damage Coverage (Dealers Open Lot)

This coverage provides physical damage coverage for vehicles the insured is holding for sale. Normally coverage is considered for owned vehicles only, but may include vehicles on consignment, as well as vehicles under a floor plan with a financial institution. As with garagekeepers, care should be given in determining the limit for dealers open lot. Be aware that the ISO garage coverage form contains a 100% COINSURANCE LIMIT. Underinsuring the lot will result in a possible coinsurance penalty in the event of a loss. Go about determining the limit for dealers open lot by considering the average number and average value per auto that the insured is holding for sale. For example a 15 car lot with an average value of 8,000 would result in a lot limit of around 120,000. The insured may want to consider 125,000 to 130,000 coverage limit to provide a little cushion for those times when the values run a little higher than average.

Miscellaneous Coverage Terms and Descriptions

Drive Other Car Coverage

This coverage may be purchased to provide liability, medical payments, as well as physical damage coverage for the insured's use of a non-owned auto not being used in connection with garage operations. If the insured is maintaining a personal auto policy, then he already has this coverage and there is no need to include it on the garage policy. Coverage is purchased per named individual. Coverage should only be purchased for those persons (normally the insured and his spouse or family member(s)) that are being furnished an auto off the lot. This is available for dealers only.

Federal Odometer Coverage

This is an endorsement which may be attached to provide coverage for autos where the mileage on an auto has been altered without the insured's knowledge, and the insured becomes involved in a cause of action.

Truth-in-Lending Errors and Omissions coverage

This is an optional endorsement which may be attached to provide coverage for errors and omissions in completing loan documents.

Fire Damage Legal Coverage

This provides fire legal coverage just like under a commercial general liability policy.

Personal and Advertising Injury Coverage

This provides personal and advertising injury coverage just like a commercial general liability policy.

Broad Form Garage Endorsement

This provides fire legal, and personal and advertising injury coverage under one form. This endorsement rounds out the general liability portion of the garage policy to make it compare to the ISO commercial general liability coverage part.

On-Hook Coverage

Most specialty carriers will exclude coverage for customer's autos while being transported or towed. This form will buy back the covearge for additional premium. On-hook coverage limit will be set per tow truck, wrecker, car hauler or rollback. The on-hook coverage limit should be equal to the maximum value per auto.

Specified Auto Coverage

This term is applied to any auto for which specific premiums are being charged for a specific auto. Normally, most specialty carriers write garage coverage exclude wreckers, and tow trucks. Therefore, it is necessary to charge normal auto premiums for the auto coverages for each vehicle. Charges should also be applied for those autos which are specifically plated such as service vehicles. These vehicles are just scheduled on the policy like any business auto policy.

False Pretense Coverage

This is an option for dealers physical damage, and provides coverage for situations where

a.) the dealer voluntarily parts with an auto under false pretenses and
b.) where a purchased auto is acquired and the seller did not have legal title.

Covered Auto Symbols used Under the ISO Garage Policy

Broad Form Products Coverage

The ISO garage coverage part excludes defective products. This form removes the exclusion and provides coverage for defective products. A $250 deductible is applied.



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