The Garage Policy- And Garage Operations. Robin C. Federici, CPCU, AAI, ARM, AINS, AIS, CPIW

Transcription

1 The Garage Policy- And Garage Operations Robin C. Federici, CPCU, AAI, ARM, AINS, AIS, CPIW

2 GARAGE COVERAGE FEDERICI S AUTO SALES

3 WHO IS ELIGIBLE? The ISO garage form eligibility is limited to franchised and nonfranchised auto and trailer dealers However, individual carriers may choose to write dealers & non-dealers on a garage form

4 ISO Dealers... A dealer sells new or used: Private passenger autos Trucks & truck-tractors Motorcycles Recreational vehicles Residential: mobile homes mobile trailers

5 Kinds of Dealers FRANCHISED Typically a NEW car dealer has arrangement with auto manufacturer to sell that maker s vehicles NON-FRANCHISED Typically a USED Car dealer

6 Non-Dealers ISO Non-dealers are written on a CGL and BAP Many carriers often write their own Garage Form Some markets will use the ISO form but amend the ISO eligibility by also writing non-dealers on the Garage Form

7 UNIQUE FEATURES Two insuring agreements 1. One insuring agreement references the general liability exposure and 2. The other references the automobile liability exposure AND in the garage form, the injuries and damages must arise out of an accident in the course of garage operations

8 OVERVIEW - GARAGE BASIC LIABILITY: Other Than Covered Auto (General Liability): Premises and operations Contractual insured contracts Products-completed operations Automobile Liability

9 OVERVIEW - GARAGE BASIC LIABILITY: The policy might be seen as a combination of business auto coverage & CGL insurance. However, the garage other than covered auto coverages are not as comprehensive as the ISO CGL.

10 INSURING AGREEMENT CGL "Garage Operations" Other Than Covered "Autos" a. We will pay all sums an "insured" legally must pay as damages because of "bodily injury" or "property damage" to which this insurance applies caused by an "accident" and resulting from "garage operations" other than the ownership, maintenance or use of covered "autos".

11 INSURING AGREEMENT - CGL "Garage Operations" Other Than Covered "Autos" Legally obligated BI and PD Caused by an accident Resulting from garage operations Defense Unknown prior to the policy period Includes continuation, change, or resumption of a covered BI or PD loss after the end of the policy period Accident = an occurrence

12 INSURING AGREEMENT CGL "Garage Operations" "Autos" We will pay all sums an "insured" legally must pay as damages because of "bodily injury" or "property damage" to which this insurance applies, caused by an "accident" and resulting from "garage operations" involving the ownership, maintenance or use of covered "autos".

13 INSURING AGREEMENT - AUTO "Garage Operations" Covered "Autos" Legally obligated BI and PD Caused by an accident Resulting from garage operations Covered Autos Covered Pollution Cost or Expense Defense

14 GARAGEKEEPERS - Optional Coverage We will pay all sums the "insured" legally must pay as damages for "loss" to a "customer's auto" or "customer's auto" equipment left in the "insured's" care while the "insured" is attending, servicing, repairing, parking or storing it in your "garage operations" under

15 GARAGEKEEPERS - Optional Coverage The garagekeepers coverage promises to pay damages for the insured's legal obligations for "loss" to a customer's auto. "Loss" means: direct and accidental loss or damage & loss of use For coverage to apply, the loss must occur while the vehicle is in the insured's care for servicing, repair, or other operations connected to a garage business

16 GARAGE OPERATIONS DEFINTION: "Garage operations" means the ownership, maintenance or use of locations for garage business and that portion of the roads or other accesses that adjoin these locations. "Garage operations" includes the ownership, maintenance or use of the "autos" indicated in Section I of this Coverage Form as covered "autos". "Garage operations" also include all operations necessary or incidental to a garage business.

17 GARAGE OPERATIONS Means: Ownership, maintenance or use of locations Portions of the roads or other accesses that adjoin these locations Ownership, maintenance or use of the autos indicated as covered autos All operations necessary or incidental to a garage business

18 GARAGE OPERATIONS This definition appears the same in all editions of the ISO garage policy The term "garage operations" defines the scope of coverage under the garage policy's liability and garagekeepers sections.

19 GARAGE OPERATIONS Garage operations" has two components: (1) the premises and operations involved in a garage business, with liability exposures comparable to those of any other commercial entity; and (2) the ownership, operation, and maintenance of covered autos, which necessitates a form of auto liability and physical damage insurance.

20 GARAGE OPERATIONS Garage operations" Covered Autos: Garage operations includes the ownership, maintenance, or use of autos that are covered autos. Covered autos are determined by the symbols that designated on the Dec page

21 GARAGE OPERATIONS Garage operations" Operations other than Covered Autos: Premises Exposures: The term "garage operations" means the ownership, maintenance, or use of locations It also includes roads or accesses that adjoin these locations..

22 GARAGE OPERATIONS Garage operations" Operations other than Covered Autos: Exposures other than Premises: The term "garage operations" also includes all operations necessary or incidental This portion of the definition provides for other garage exposures.

23 GARAGE OPERATIONS Garage operations" Neither of these words are defined in the policy: Necessary Incidental

24 GARAGE OPERATIONS Garage operations" Courts have generally interpreted the phrase "necessary or incidental which is found in a variety of standard and nonstandard insurance policies broadly so as to provide coverage.

25 . GARAGE OPERATIONS Common Usage Dictionary Necessary (adjective): so important that you must do it or have it: absolutely needed, unable to be changed or avoided Incidental (adjective): happening as a minor part or result of something else, being likely to ensue as a chance or minor consequence

26 GARAGE OPERATIONS The Courts: The range of activities that can be engaged in as a "minor consequence" of the ownership, maintenance, or use of premises where an auto business is conducted is wide indeed and need not be confined to activities on those premises themselves.

27 GARAGE OPERATIONS Henry v. General Cas. Co. of Wis (1999) A customer drove a dealer loaner car while the dealership was performing repair work on the customer's own vehicle The customer was determined to be an insured under the nonauto garage operations portion of the policy The court ruled that supplying a temporary substitute vehicle constitutes an activity "incidental" to the named insured's garage operations

28 WHO IS AN INSURED COVERED AUTOS Permissive Users Customers Has no insurance = Insured up to compulsory or financial responsibility limits Has other insurance LESS THAN compulsory = Insured for the amount that compulsory limits exceed their other insurance

29 Questions of Covered or Not If you were the carrier which of these activities/products would consider necessary or incidental to the garage operations?

30 Questions of Covered or Not Nail Salon Sale of parts and accessories (oil, windshield washer fluid, wiper blades, seat covers, brake fluid, etc.) Food court Massages Movie theatre Day Care facilities Pony rides

31 Questions of Covered or Not Water slide Dealer promotional items for sale, including: Tee shirts Coffee mugs Auto floor mats Toy cars/trucks

32 AUTO DEALER FEDERICI S AUTO SALES

33 AUTO DEALER FORM Insurance Services Office, Inc. (ISO), filed extensive revisions to its commercial auto insurance program, to be implemented in October The most significant change introduced with this filing was the replacement of the standard garage coverage form with a new auto dealers coverage form.

34 AUTO DEALER FORM The standard ISO auto dealers coverage form provides: general liability auto liability physical damage, and related coverages Those eligible for coverage are franchised and non-franchised businesses that sell and service autos

35 GARAGE VS. AUTO DEALER Old Garage Form: Both auto and non-auto liability were addressed in a single section The two categories of liability coverage had separate insuring agreements A single set of exclusions

36 GARAGE VS. AUTO DEALER Old Garage Form - Endorsements: Damage to Rented Premises (CA 25 10) Personal Injury (CA 25 08) Medical Payments (CA 25 05) Broadened Coverage Garages (CA 25 14): Personal & advertising injury Host liquor Damage to rented premises Incidental medical malpractice Nonowned watercraft Spouse of partners as insureds Newly acquired garage businesses Limited worldwide liability

37 GARAGE VS. AUTO DEALER Auto Dealer Form: Is structured differently The Auto & CGL coverages are completely separate and self-contained Each section contains its own provisions relating to who is an insured and its own set of exclusions.

38 GARAGE VS. AUTO DEALER Auto Dealer Form: Personal and advertising injury coverage & medical payments coverage are incorporated into the "General Liability Coverage" section Also included are coverages that are only available under the garage form by adding the Broadened Coverage endorsement

39 GARAGE VS. AUTO DEALER Auto Dealer Form: Section I COVERED AUTOS COVERAGES: This section provides auto liability, physical damage, and garagekeepers coverage in connection with vehicles designated in the policy as "covered autos."

40 GARAGE VS. AUTO DEALER Auto Dealer Form: Section II GENERAL LIABILITY COVERAGE: This section provides GL insurance bodily injury and property damage, personal and advertising injury, locations and operations medical payments on terms comparable to those of the standard commercial general liability policy.

41 GARAGE VS. AUTO DEALER Auto Dealer Form: Section III E&O COVERAGE: An entirely new coverage section is made part of the form "acts, errors or omissions liability coverage."

42 AUTO DEALER Acts, Errors or Omissions: This coverages insurance against claims involving: Noncompliance with laws governing: credit or lease agreements disclosure of odometer readings E&O as a licensed insurance agent or broker for coverages sold in connection with the sale or lease of an auto Defect in title to a sold or leased auto

43 GARAGE VS. AUTO DEALER Auto Dealer Form- Section II - GL: a. We will pay all sums an "insured" legally must pay as damages because of "bodily injury" or "property damage" to which this insurance applies caused by an "accident", and resulting from your "auto dealer operations" other than the ownership, maintenance or use of "autos"...

44 GARAGE VS. AUTO DEALER Auto Dealer Form- Section II - GL: We will pay all sums the "insured" legally must pay as damages because of "personal and advertising injury" to which this insurance applies, caused by an offense arising out of your "auto dealer operations", but only if the offense was committed in the coverage territory during the policy period...

45 GARAGE VS. AUTO DEALER Auto Dealer Form- Section II - GL: We will pay medical expenses as described below to or for each person who sustains "bodily injury" to which this coverage applies, caused by an "accident" and resulting from your "auto dealer operations"...

46 GARAGE VS. AUTO DEALER Auto Dealer Form- GL: Bodily Injury & Property Damage Personal & Advertising Injury Location & Operations Medical Payments Replaced the phrase garage operations with the phrase auto operations

47 GARAGE VS. AUTO DEALER Auto Dealer Form: Auto dealer operations" means: The ownership, maintenance or use of locations for an "auto" dealership and that portion of the roads or other accesses that adjoin these locations. "Auto dealer operations" also include all operations necessary or incidental to an "auto" dealership.

48 GARAGE VS. AUTO DEALER Auto Dealer Form: Auto dealer operations definition includes only ONE component addressing the GL exposures of premises and operations

49 Robin Federici, CPCU, AAI, ARM, AINS, AIS, CPIW