Garage Keepers Liability

Overview

Garage keepers liability is a specialized insurance coverage for businesses that take custody of customers' vehicles as part of their operations. It covers physical damage to customers' automobiles while the vehicles are in the insured's care, custody, or control. This coverage is essential for businesses like parking garages, valet services, auto repair shops, car dealerships, and towing companies where customer vehicles are routinely stored or serviced on the premises.

How It Works

Standard general liability and commercial auto policies typically exclude damage to property in the insured's care, custody, or control. This creates a significant gap for businesses that regularly handle customers' vehicles. Garage keepers liability fills that gap.

The coverage can be written on three different bases:

• Legal liability: Covers damage to customers' vehicles only when the business is legally liable (at fault). This is the most restrictive and least expensive option.
• Direct coverage — primary: Covers damage to customers' vehicles regardless of fault, acting as primary coverage. The customer does not need to file a claim on their own auto policy first.
• Direct coverage — excess: Covers damage to customers' vehicles regardless of fault but only after the customer's own auto insurance has been exhausted.

Covered perils typically include fire, theft, vandalism, collision, and weather damage. The policy has a per-vehicle limit and an aggregate limit.

Compliance Relevance

Garage keepers liability is a niche but important coverage in COI compliance for specific industries:

• Parking operations: Property managers who contract with valet or parking companies should require proof of garage keepers coverage to protect tenants and visitors whose vehicles are in the operator's care
• Auto service vendors: Any vendor performing vehicle maintenance, detailing, or towing on behalf of a property or fleet should carry this coverage
• Limit verification: Compliance teams should ensure the per-vehicle limit is adequate for the types of vehicles being serviced — a standard $50,000 limit may be insufficient for luxury or commercial vehicles
• Coverage basis: Direct primary coverage provides the strongest protection for the certificate holder's tenants and visitors

This coverage is typically evidenced on the commercial auto section of the ACORD 25 or on a separate garage policy certificate. Compliance platforms should include garage keepers as a trackable coverage type for applicable vendor categories.