Our insured, an auto dealership covered by garage form CA 00 05 (12/93), with symbol designation 21, accepts autos for lease delivery. It may transpire that a vehicle is released to a potential lessee prior to the lessee’s insurance being verified and the lease finalized.

Under these circumstances, would the garage coverage respond if the lessee were to cause an accident, with our insured sued as a result?

Pennsylvania Subscriber

The symbol 21 gives liability coverage to “any auto.” “Garage operations” includes the “use of…covered autos,” which would include use by a prospective purchaser, or, in this case, lessee. The insured has liability coverage for any bodily injury or property damage caused by the potential lessee.

Exclusion 7, leased autos, would not be applicable since, until the lease has been finalized, the auto is not yet “leased.”

Insofar as damage to the leased auto itself, garagekeepers coverage would not apply, since the vehicle has not been left in the insured’s care for “attending, servicing, repairing, parking or storing.” Depending on the insured’s arrangements with the insurance company, section IV, physical damage coverage, could apply.