GKLL Coverage or Garage Operations Liability Coverage

November 2014

Our insured carries a garage policy to cover a car wash operation. The policy carries a symbol 29 in the liability section and symbol 30 for garagekeepers coverage. Under garagekeepers, the insured carries collision coverage and specified perils coverage.

The way the car wash operates is that the customer comes through one side of a tunnel and comes out on the other side. The customer never leaves the car, even though the car is driven through the tunnel by the machine. During the process one of the machine rollers ripped off a rocker panel molding of the customer's car.

The adjuster argues that the loss is not covered because he says that the policy only covers specified perils. The agent argues that this loss should be covered under collision coverage. He says that there was a collision between the machine roller and the vehicle. On the other hand, the insured believes it should be covered under garage operations liability. He says that he never got the custody or control of the vehicle. And since he did not have the custody or control of the vehicle, the claim should not be paid under the garagekeepers coverage and instead should be paid under liability coverage.

What is your opinion about this issue?

Florida Subscriber

We are of the opinion that coverage in this instance is difficult to pinpoint.

As for the GKLL coverage, the adjuster is interpreting the coverage too strictly. It is reasonable to consider the impact of the rollers with the rocker panel molding as a collision. A collision is simply an impact on the covered auto from another object and that is certainly what happened. However, the GKLL coverage is for sums the insured must legally pay as damages to the customer's car while the car is left in the insured's care. You state that the customer never left the car so we do not see how the car could be left in the insured's care. In other words, is the insuring agreement met under these circumstances? If not, the GKLL coverage is not applicable.

As for the liability coverage, we can see the insured's point of view that he did not have care or custody or control of the car at the time of the damage since the owner of the car was still in it. So, the key point here is whether the vehicle was being used in connection with the garage business in accordance with symbol 29. The definition of used in the dictionary means to put into action or service or to carry out a purpose or action by means of, that is, utilizing something, or to make use of. This definition is not very specific but it is reasonable to see this car being used in connection with the insured's business, that is, being put into action or service in connection with the insured's business of washing cars.

So, based on the ambiguity of the coverage, we are of the opinion that the insured gets the benefit of the doubt and has coverage under the liability section of the policy since the covered auto was used in the business of the insured.