Which Garage Insurance Coverage Is Right for Your Automobile Shop?

When it comes to buying the right garage insurance coverage for your automobile repair shop, there is one question that needs to be asked: “Are you looking for direct primary, direct excess coverage, or legal liability garagekeepers coverage?”


  • Direct Primary Coverage


It all begins with the vehicle that is in your West Hollywood garage for an auto repair, and that means it is in your care, custody, and control.

Direct primary auto repair shop insurance coverage provides insurance coverage to the vehicle in your care, custody, and control without any regard to fault. You do not have to be legally liable for damage caused to the vehicle at your West Hollywood garage. Under this form of garage insurance coverage, your customer gets payment for damage to his vehicle directly from your insurance company.

Sounds like great coverage.  It is – for the customer.


  • Garage Legal Liability Insurance Coverage


How does direct primary garage insurance coverage differ from garage legal liability insurance coverage?

Under the legal liability policy form, you would have to be legally liable for the damage to your customer’s vehicle while it is in your care, custody, and control at your West Hollywood garage. 

Assume there is damage to the customer’s vehicle while it is stored on your premises. The customer has to report the damage to his own insurance company. His insurance company will pay for the damages to his vehicle. His insurance company can subrogate his claim to your insurance company, but if you are not legally liable for the damages, your customer’s insurance company cannot seek reimbursement from your liability insurance company. 


  • Direct Excess Coverage


Another form of coverage is also offered – called Direct Excess – This form affords the same protection as the direct primary coverage form but goes a step further to pay in excess of any other collectible insurance the owner of the vehicle has.

Choose Garage Insurance Coverage Based on Your Clientele

So which garage insurance coverage do you choose?  A discussion of the type of clientele you have might give you some insight.

Do you service regular high-end, high referral-based West Hollywood customers, or do you normally handle customers where no real relationship exists? You are going to repair their vehicle once and most likely not see or hear from them again.

If you are working in an area where most of your vehicles are Lamborghinis or Ferraris, you want to go with a direct primary coverage policy form. You might not want to hassle with a good customer because he is out with his $5,000 deductible by putting the claim into his own insurance company.

While you view this option as superior customer service, keep in mind that under the direct primary coverage form, any claims that are paid will ultimately not only affect your loss history with your insurance company but your future premiums as well.

Make Sure You Are Insured Against Any Claims with the Right Garage Liability Insurance

Buying the right garage liability insurance can be overwhelming. There are so many different exposures you have to be aware of and be insured against. Not only do you have to take care of your customers’ vehicles while they are in your care, custody, and control at your premises, you have a legal liability to contend with.

Once the vehicle is repaired and taken out for a test drive, you want to be sure you are insured for any damage you do to the customer’s vehicle and also to any damage or injury you cause to a third party if an accident occurs while you are conducting the test drive.

Curious to learn which garage insurance coverage would best suit your automobile shop? Then, don’t hesitate to contact the experts at Makar Insurance to get help for your insurance needs. Give us a call at (310) 477-5000 for immediate assistance.

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