Consider who is responsible for an accident when accepting an automobile for repair at a local garage. As the mechanic completing the work, you have taken responsibility for care custody and control of the vehicle. Various repairs may require that you take that automobile for a test drive to determine the problem and again once the work is completed, but what if during that test drive you are involved in an accident with the vehicle?
Is the owner of the vehicle required to report this to their auto insurer? Does the driver (mechanic) have to report to their personal insurance for coverage? Or does a policy for the garage cover this damage under their commercial insurance policy? We understand there can be some confusion. Unfortunately, if an insurance agent has not sold the proper coverage and protection to the garage and they have only a commercial general liability policy, that will not extend to cover the unowned vehicles you are responsible in your care.
That gap in your coverage is easily identified when you report the claim, a garage auto policy is required.
Not all garage auto policies are simply for a business that is easily identified. If you allow others to park their summer vehicles or classic cars in one of your barns or unused buildings on your property for a small fee, whether you do so with the intent to make revenue or as a favour with a small compensation for your inconvenience, you need to realize that there is now an exposure that your current property insurance policy would most likely not cover. This happens more than you may think, quite often actually.
Storing cars on your property or inside a building on your property means those vehicles are in your care, custody, and control and you are now responsible for them. Some people will defend the storage by stating they never touch any of the cars or keep any keys, unfortunately that is not typically the case.
Consider these three scenarios:
The vehicle owner has parked his parked his Antique (Collector) Car, for the winter, and leaves home on an emergency prior to receiving his auto insurance policy renewal. What will be the result if there is no coverage for that car and a loss occurs at your premises while the vehicle is in your care and custody, you might be liable. This could include a fire in the building or a collapsed roof due to the weight of ice or snow.
In order to allow others to get their vehicles out of storage from the back of the building, you need to move other vehicles parked in front. Knowing this could happen the owner has trustingly left you an extra key for this circumstance only. While backing out of the building you make contact with another vehicle or the building itself, you are responsible for the damage.
Or if your customer comes to pick up their vehicle, and has a medical (or other) emergency while retrieving their vehicle or even as they are starting to drive away and cannot drive the stored vehicle. A situation now exists where you will probably have to operate that vehicle and become responsible for the operation of an non-owned automobile on your property.
We recommend always securing the proper coverage. If you want to assume the risk of storing non-owned vehicles, accept the responsibility to make sure you have the correct insurance in place.
Article Written by George Nikolaidis
Erie Mutual Insurance Manager – Underwriting & Loss Prevention
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