Topics covered:
Symbols
Coverage
Exclusions
Limits

Deductible
Reporting requirements
Nonreporting provision

Symbols

The designation of covered autos is a function of the use of the appropriate symbol on the declarations page. For most auto dealers, symbol “22″ can be used to indicate coverage on all owned autos. Symbol “23″ limits coverage to owned private passenger autos and symbol “24″ reverses the arrangement so that coverage applies only on autos other than private passenger vehicles. Symbol “27″ can be used by nondealers to indicate coverage on scheduled autos. Dealers can use symbol “27″ also, if they have scheduled autos used by outsiders (e.g., by a school for driver training, by the garage owner's minister, etc.).

The symbols are shown opposite the appropriate coverages on the declarations page. For example, if an auto dealer insured desires $250 deductible collision insurance on all owned autos and on two scheduled autos, the entry opposite collision coverage should be symbols “22″ and “27.” Note that symbol “22″ is used even if the dealer intends that the collision insurance apply only to a specific subgroup within the all-owned-autos category. Perhaps only used cars, demonstrators, and service vehicles are to be insured against collision damage. The auto dealers” supplementary schedule (CA DS 07) is the place for entering that distinction. All owned autos must first be made subject to being covered autos before a subgroup can be singled out as the owned autos intended for coverage.

The auto dealers” supplementary schedule is a form that must be attached to the garage coverage form declarations when the form is used to write an auto dealer garage risk (other than a trailer dealer); there is another supplementary schedule, CA DS 08, for a nondealer or trailer dealer risk. Whether the insured is an auto dealer or not, the supplementary schedule is required, as noted, even though the insurer may amend the arrangement and format of the schedule to serve its own policy preparation needs and procedures. However, if the arrangement or format is altered, the major items of the supplementary schedule must be kept in the same order because of specific references in the garage coverage form.

Interests to be covered by physical damage insurance must be carefully designated in the auto dealers” supplementary schedule in item 7. Such interests are shown separately as to new cars and used autos, demonstrators, and service vehicles. For each category — new or used — and for each peril, the insured must elect coverage for 1) cars that are owned outright by the insured dealership, 2) cars in which an outside creditor has an interest, with the coverage being for the insured dealer's equity only, 3) cars in the same situation but with insurance covering the interest of both the named insured and any creditor named as a loss payee, and 4) consigned automobiles with the interest of the owners automatically covered along with that of the named insured.

Though this device presents the insured with a multiplicity of possible combinations, most insureds —particularly if values are to be reported —should be encouraged to keep the selection to the simplest and most narrow range. Otherwise the possibility of misreporting and consequent disappointment following a loss is multiplied in the same proportion. When the garage coverage form does not cover all interests, the insurance company's liability is limited to the same proportion of a loss that the amount of the designated interest bears to the value of the damaged automobiles at the time of loss.

Whatever the symbol and whatever the interest covered, only autos are insured. Dealers will sometimes accept other property in trade for an automobile — a boat, for example — and may even report the value of the property as another unit in their inventory sitting on the lot for sale. Though the garage policy's definition of “auto” is quite broad, only a land motor vehicle or trailer qualifies for coverage.

Automobiles of others that the insured has for sale on consignment are eligible for physical damage coverage, too. The appropriate entry on the declarations page is symbol “31.”