Q

We insure a new car dealer on a garage policy. This insured owns several office buildings that he leases to others. He also owns and operates a restaurant.

Some people I work with believe all these exposures should be insured on the garage policy. Their reasoning is that the definition of “garage operations” includes “all operations necessary or incidental to a garage business.” Incidental is not defined on the policy.

Should all of these exposures be insured on the one policy?

Illinois Subscriber

A

We do not consider restaurants and office buildings incidental to a garage operation. Therefore, the garage form should not be used to insure all these exposures. A separate CGL policy is needed.

Even though the word incidental is not defined on the garage policy, the policy states that operations that are incidental to a garage business are included. A restaurant and office building are not incidental to a garage business, although they may be incidental to the owner of the garage business.

In addition, a garage policy would not provide as broad coverage as a CGL form for exposures inherent in office buildings and restaurants. A CGL policy is a better way to provide the appropriate coverage. The garage operation should be excluded from the CGL coverage, and the other exposures should be excluded from the garage policy, unless the insurer agrees, because otherwise the situation could lend itself to limits from the two coverage forms being stacked.