Most business owners who purchase Garagekeepers Legal Liability insurance are concerned about cars being stolen or vandalized while parked in their lots or garages. But sometimes there's a much more serious twist—one involving gunshots and damaged cars. That was the case when one FC&S subscriber described the following unusual (and dangerous) situation.

The agent handles a sports arena with an adjacent parking lot that is fenced and secured with a gate. Some people entered the arena area and started shooting. The parking lot attendant closed the parking lot gate and, as a result, the car owners couldn't exit the lot. A number of cars were damaged by flying bullets.

The agent said that the arena's insurance company had denied coverage for the damaged parked cars, and the agent questioned that denial. After all, the business carried Commercial General Liability (CGL) insurance and Garagekeepers Legal Liability on a specified-perils basis. The agent felt that the Garagekeepers Legal Liability policy should be triggered because the attendant, in closing the gate, was negligent.

But FC&S disagreed.

The CGL insurance would not cover the damage because the cars—personal property in this case—were in the care, custody and control of the insured business owner. The CGL's damage-to-property exclusion [j.(4)] excludes coverage for damage to personal property (the parked cars) in the insured's care, custody or control. Having accepted payment for allowing the cars to be parked in the lot and then actually closing the gate, the business owner (through the attendant) affirmatively took control of the cars. Therefore, there is no coverage on the CGL policy for the bullet damage.

But what about the Garagekeepers Legal Liability coverage, which the business owner bought to cover damage to the cars in his lot?

The issue here is that the Garagekeepers Legal Liability policy in question is written on a specified-perils basis. The specified perils that are covered are fire, lightning, explosion, theft, and mischief or vandalism. Damage via gunshots is not one of the specified perils, and it really can't be considered mischief or vandalism—it is much more serious than that. There would be no coverage for the gunshot damage under the specified-perils language.

The problem for this agent, and for many who are writing this coverage, is that not only must the coverage be carried—it must be written in a broad enough fashion to apply to the actual damage. Had the Garagekeepers Legal Liability coverage been written on a comprehensive basis, instead of only for specified perils, the gunshot damage would have been insured.

You get what you pay for and, in this case, the coverage that was paid for just wasn't comprehensive enough.

Special Reports /

Parking Perils: Garagekeepers and Gunshot Damage

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