Customer Vehicles Create a Serious Business Exposure

Repair shops, body shops, dealerships, towing companies, parking operations, car washes and detailers throughout Michigan regularly take possession of customer vehicles. If one of those vehicles is stolen, damaged by severe weather, vandalized or involved in a collision while in your care, the financial and reputational impact can be significant.

Garagekeepers liability insurance is designed to address damage to customer vehicles while they are in a business’s care, custody or control. For auto-related businesses in Southeast Michigan and across the state, it can be an important part of a broader insurance program.

What Is Garagekeepers Liability Insurance?

Garagekeepers liability coverage may help pay for covered damage to a customer’s vehicle while it is being serviced, repaired, parked or stored by your business. The exact protection depends on the policy form, selected causes of loss, limits, and deductibles.

It is different from general liability or garage liability. Those policies may address premises, operations and certain third-party liability exposures, but damage to property in your care, custody or control can be limited or excluded. Garagekeepers coverage is intended to address customer-vehicle exposure.

Which Michigan Businesses Should Consider It?

• Auto repair, maintenance, oil-and-lube, tire, glass and transmission shops
• Collision repair and auto body shops
• New and used vehicle dealerships
• Towing, recovery and vehicle storage operations
• Parking garages, parking lots and valet services
• Car washes, detailers and accessory or window-tint installers
• Fleet maintenance providers and other businesses that hold customer vehicles

For a broader view of protection for repair facilities, see Allied’s auto shop insurance coverage guide.

Three Common Garagekeepers Coverage Options

Legal liability coverage

Responds when the business is legally responsible for covered vehicle damage. Because responsibility may need to be established, the claim process can involve questions about fault.

Direct excess coverage

May respond regardless of fault after the customer’s own insurance applies, subject to the policy terms. It can help with a remaining covered loss, such as a deductible.

Direct primary coverage

May respond regardless of fault before the customer’s insurance, subject to the policy terms. It generally offers the broadest customer-focused response, but it may cost more.

What Can Garagekeepers Insurance Cover?

Depending on the policy and the causes of loss selected, coverage may address:

• Theft or attempted theft
• Fire or explosion
• Vandalism
• Hail, wind and other covered weather events
• Collision or upset
• Damage while an employee moves a vehicle on the premises

Coverage may be written for comprehensive losses, collision losses, or both. Review the policy carefully because floods, vehicles away from the premises, faulty workmanship, mechanical breakdown, and personal property left inside a vehicle may be treated differently or excluded.

Michigan and Southeast Michigan Risks to Review

Businesses in Detroit, Troy, Rochester Hills, Sterling Heights, Warren and communities across Oakland, Macomb and Wayne counties should evaluate both individual vehicle values and the total number of vehicles that could be affected by one event.

• Severe storms and hail that could damage multiple vehicles on an outdoor lot
• Snow and ice that increase the chance of damage while vehicles are moved or lots are cleared
• Heavy rain or flooding, where coverage can vary substantially by policy
• Vehicle theft, break-ins and catalytic converter theft
• Late-model, electric, luxury or specialty vehicles that can increase repair costs and total values at risk

How Much Coverage Does Your Business Need?

Start with the highest number and value of customer vehicles you may hold at one time, not simply the average day. Then review per-vehicle, per-location and catastrophe, or aggregate limits. A busy lot can face a much larger loss when one hailstorm, fire or theft event affects several vehicles at once.

Also review deductibles, security requirements, off-premises vehicle use, test drives, towing and storage arrangements. Policy language and carrier requirements differ, so coverage should be matched to how your business actually operates.

Ways to Reduce Garagekeepers Claims

• Photograph and document vehicle condition at drop-off and pickup
• Use clear repair orders and signed intake forms
• Secure and track keys with a controlled check-in and check-out process
• Use appropriate lighting, fencing, cameras and alarms
• Train employees on safe vehicle movement, including winter conditions
• Limit and document after-hours access
• Review limits as inventory, vehicle values, services or locations change

Frequently Asked Questions

Is garagekeepers insurance required in Michigan?

Requirements can depend on contracts, lenders, landlords and the nature of the operation. Even when it is not specifically mandated, businesses that take custody of customer vehicles should evaluate the exposure with a licensed insurance professional.

Does general liability cover a customer’s vehicle in my care?

General liability commonly limits or excludes damage to property in the insured’s care, custody or control. Garagekeepers coverage is designed for this customer-vehicle exposure, subject to policy terms.

Does it cover tools or personal items left inside a customer’s car?

Personal property, tools, and cargo inside a vehicle may be excluded or limited. Ask specifically how customer belongings are treated.

What is the difference between garage liability and garagekeepers liability?

Garage liability generally addresses liability arising from garage operations, while garagekeepers coverage addresses covered damage to customer vehicles in the business’s care, custody or control. Many auto businesses need both as part of a coordinated program.

Protect Your Michigan Auto Business

One storm, theft or employee mistake can affect several customer vehicles and strain the trust your business has worked to build. The right garagekeepers structure can help protect both your balance sheet and your customer relationships.

Allied Insurance Managers work with auto repair and collision businesses and offer insurance options for specialty industries. Explore Allied’s auto repair and collision shop program or contact the agency to review your garagekeepers limits, deductibles and coverage form.