Insurance for the automotive industry is a specialized field. Your broker might be a nice person, but does he or she really know your industry? If not, you might want to look around a bit. The underlying theme of this post is that the biggest mistake that garage owners make is basing their insurance buying decision on price only: I understand that premium costs are an important factor, but knowing what you’re getting for that price can be a make or break 
situation in the event of a loss. If you are shopping, it helps to know what you’re buying. There are major coverage differences between garage insurance packages. Having the mindset that insurance is insurance, it will cover me is like saying a car is a car… now view mental picture of the Yugo. Enough said. Below I will outline a major coverage issue between different garagekeepers packages.
Direct Primary, Direct Excess, and Legal Liability – These all have to do with your customers’ vehicles while in your care, custody and control. Before you get bored with these terms, read below to find out why you NEED to know what they mean.
- Legal Liability – this is what you will find on most of the cheapest garage packages available. If a customer’s vehicle is damaged, the customer must prove that you are legally liable (negligent) in order to recover damages from your insurance. This can not only create a loss of goodwill if coverage is denied, but it also forces the customer to jump through hoops to prove your negligence. This doesn’t end well for your relationship with the customer.
- Direct Excess – this is better than Legal Liability because it doesn’t require your customer to prove your negligence. However, this coverage only applies after the client files a claim with his own personal auto insurance policy. If the client’s personal auto insurance denies the claim or the client’s policy limit doesn’t cover all of the damages, then the garagekeepers insurance would apply. Again, this doesn’t require the customer to prove you are negligent, but it does force the client to file a claim with their own personal auto insurance – another hoop for the client to jump through.
- Direct Primary – This is the best coverage available because it takes the burden off of the customer and in the event that a customer’s vehicle is damaged while in your care, custody, and control, you will keep a strong customer relationship. Coverage is provided by the garagekeepers policy without the need to prove negligence and legal liability. In addition, the client doesn’t need to file a claim on his personal insurance. Essentially, you, as the garage owner, are taking responsibility for the customers vehicle while it’s in your care. This is also the assumption that most customers have when they drop their vehicle off for service. Your garagekeepers coverage pays for the loss from the first dollar without regard to or contribution by the vehicle owner.
Of these three coverages, Direct Primary is the most expensive, but don’t let that stop you from asking for it. The difference in price can be less than $100/month to go from basic Legal Liability to Direct Primary coverage. Keeping your customers happy keeps them coming back, and keeps them referring new customers your way.
For more information on Garagekeepers insurance, please call Jayne Engle Allen at Engle & Associates Insurance Brokers – 805-781-6336 or toll free at 877-544-8929. You can also visit our website for more information and a free Automotive Service Insurance Quote.