Although your Garage Liability Insurance policy is one of the most powerful of all the many types of insurance policies on the market today, there are certain situations and events that are not automatically included in your policy. It is very critical that you become aware of these exceptions and exclusions so that you may avoid them or else purchase additional insurance coverages to supplement your Garage policy. You must be aware of the fact that companies always have the right to void your policy if they find that you either lied or withheld material information from them.
Every employee and officer of your company must be listed on your garage policy, whether or not they drive a company vehicle. This includes managers, sales persons, mechanics, lot boys, runners, detailers and office/clerical personnel. Be sure to make your agent aware of the job classification and full or part time status of each person. Be careful. If you have some people working for you but are attempting to consider them to be independent contractors, you may be very sad when one of them is involved in an accident and your policy doesn't cover them. In addition, you must not just assume that family members or acquaintances are automatically covered. They are NOT automatically covered.
Employees without a valid Florida Drivers license may not be covered. If the license is suspended or revoked, the company will probably issue an immediate notice of intent to cancel. If an employee legitimately has no license, he can probably be excluded by name from your policy and that will be acceptable. Employees with out of state licenses will generally be given a short time to acquire a Florida license. Just the presence of one DUI or Open Container conviction on a persons record is poison. Companies do check up on driving records and generally look back over the past three years for infractions and violations.
Coverage is afforded only to locations and employees listed on the policy. When you add a location or hire or fire someone, you should notify your agent immediately and followup in writing within 10 days. Delaying may cause harm since companies have the right to audit your records. It is of no benefit to you to hide or delay a change. The company will discover it sooner or later anyway and may charge you extra premium. The fact that you failed to report a change may be an excuse for the company to refuse to pay a claim if an unreported person or location is involved in an incident. The fact that you want to add a person does not mean that the company must accept him. If his record is bad, he can be refused coverage.
Employees with faulty driving records (tickets/suspensions) may cause your policy to be cancelled or non-renewed. In some cases, the insurer will simply charge you a higher premium or perhaps may allow you to exclude a particular driver from your policy. If a driver is specifically excluded, you must make sure that he does not drive any of your (or your customers) vehicles. DUIs and DWIs are poison to insurance companies. In some cases, they will refuse to cover a dealership that has even one owner or employee with a DUI or DWI mark on his record. In any event, the price will be much higher when such convictions are discovered.
Casual usage of vehicles. Sometimes, dealers will allow a friend or neighbor to drive a company vehicle. This seems like a right nice thing to do. If it happened once or twice a year, the insurance company would not like the idea, but they could possibly cover one time and then cancel you or at least non-renew you. But, if that friend or neighbor is going to be using one of your vehicles on a regular basis then you need to add him or her onto your policy if the company will allow you to do so.
Family of owners and employees. If you are going to allow your wife or children to drive one of your vehicles be sure to name them on your garage policy. The same is true for any of your employees family members. If you, or your employees, have a personal vehicle and have it insured under your own personal auto policy, you have certain benefits that are not just automatically included in a garage policy. Two good examples of such benefits are the Drive Other Car and Broadened PIP coverages. Under a personal auto policy, if you borrow a neighbors car your personal insurance travels with you and protects you even if the neighbor had no insurance at all. And, under a personal policy your PIP coverage entends to cover you and every member of your family, whether they are a passenger in a vehicle or even if they are struck by a vehicle while they are walking. These are some very powerful benefits that are not included in a garage policy. These benefits can usually be added for any employees that you choose, but it costs extra money. If someone tries to tell you that it is free, it just means that it is already added to the price and you don't have a choice to reject it. Your agent can help you determine if these coverages are necessary for you. If an employee will be driving his personal car regularly on company business, tell your agent.
Regular usage of vehicles. Sometimes a dealer will drive a car from his inventory to and from home just like it was his own private car. This may or may not be OK to the company. Some dealers even like to provide a vehicle for a manager or a salesman. This is really the kind of thing you must tell your agent about before it happens. This problem really rears its ugly head when that company vehicle is driven by a friend of the salesman or a wife or child who is not specifically named on your garage policy. Call your agent and see if its OK to furnish vehicles for use outside work, and then if it is acceptable to the company add them to your policy. It will cost you extra to name them, but at least they will really be insured. You could face some major law suits if something happened and the company decided that you had been deceitful by not telling them about all drivers. Garage coverage is generally a business type of coverage. Using it to avoid buying a personal policy is not very wise.
Jump in Everybody, were going to the auction. If you buy a bunch of cars from the auction and then grab every warm body you can find to car-pool over there and then have everybody drive a car back, you should be sure that everyone involved is listed on your policy. If any of them are excluded because of a bad driving record, you are at your own risk if they drive. If a casual friend happened to just be there and he drove a car for you, he could possibly be OK, unless he was there regularly and you used him regularly as a driver. If you drive more than 50 miles to pickup or deliver a vehicle, talk to your agent first. You need a policy endorsement known as Dealer Drive Away Coverage to insure pickup or delivery outside a 50 mile radius.
What is a regular driver? You may believe that a person who drives just once in a while is really not a regular driver. Dont be fooled. The company and the courts decide what is regular. If you let anyone borrow or use a car, make sure they are covered.
Be aware that if someone is injured while performing work for the dealership it is a workers compensation matter and is not covered by your garage policy. You may think that you are too small to need workers comp, but that is not true. By not having Workers Compensation insurance, you can be sued by injured employees and independent contractors for the cost of injuries and loss of future wages. With workers comp, you are pretty well assured of not being sued for employee injuries.
Garage liability policies do not provide coverage for your personal property or for property of others in your care. You can buy coverage for these risks, but it is not automatically included. Ask your agent.
Dealer plates may not be loaned out to other dealers or independent contractors. You can't put a dealer plate on a vehicle that is registered in your own personal name to avoid having to buy insurance for your personally owned vehicle. Dealer plates are to be used only on vehicles that are owned by the dealership. If you have a wholesale only license, you are not allowed to have dealer plates at all. Wholesalers may only use paper plates for cars in their inventory.
Consignment inventory (cars on your lot that are not owned by you) are not covered by Physical Damage insurance or by Garagekeepers Legal Liability insurance. If you allow another dealer to display his vehicles on your lot you may have problems if one is stolen or is involved in an accident.
Theft by trickery and voluntary parting are not covered. If you leave the keys in a vehicle and someone takes it you will probably not be paid for the loss by your insurance company. If you give the keys to someone and he drives away with the car and never comes back, that is not theft, that is voluntary parting. It is not covered. Never let a customer take a test drive without one of your people in the car with him.
Coinsurance is a term that is used when insuring property, such as your inventory. If you insure your vehicle inventory, be sure to estimate the full value (100% of wholesale). If you don't, the Coinsurance clause in your policy may get you. The value of your inventory is determined by the average value in the current issue of the Black Book, or your cost - whichever is less. Your deductible on Physical Damage applies per vehicle regardless of the number of vehicles involved in the loss. The maximum amount of coverage allowed on a single vehicle is generally limited to $25,000.
Specified Perils is sometimes offered on a garage policy as a substitute for Comprehensive Physical Damage coverage. Comprehensive costs more but is more inclusive in what it covers. Specified Perils only covers loss by fire or explosion, theft, windstorm, hail or earthquake, flood, mischief or vandalism. Generally, there is no glass coverage offered through specified perils.
Certain types and uses of vehicles are not covered under a normal garage policy. Rental autos, watercraft, and aircraft are not covered. Autos used for retail delivery or public vehicles are not covered. Tow trucks and/or wreckers are NOT covered without special written endorsements.
Dealer plates must be approved by your insurance company before you procure them from the tag office or Tallahassee. You can not just go buy a fistfull of dealer plates and think that you have insurance on any car you put them on. Handing a dealer plate to one of your independent contractors who has not been named on your policy is really dumb.
If you or one of your vehicles is involved in an accident or claim, report it immediately to your insurance company even if you are not at fault. Always be sure to provide as much information as possible, including a police report if available.
Garage mechanical operations (repairs) should be covered by purchasing Garagekeepers Legal Liability. If you perform any repairs for the public you must register with the state of Florida as a repair center and in certain counties you must purchase a minimum of $50,000 of Garagekeepers insurance. This type of insurance covers customers cars in your care, custody, and control left for repair.
This is a brief interpretation of coverages and exclusions. Please read your policy carefully and if there are any questions please contact your agent. This report is intended for the purpose of giving you general thoughts but only your policy can explain specific coverages for you.