Iowa Subscriber

The insurer is misreading the garagekeepers coverage, especially since this is on a direct primary coverage basis.

The garagekeepers insuring agreement states that the insurer will pay all sums that the insured legally must pay as damages for loss to a customer's auto left in the insured's care while the insured is attending, servicing, repairing, parking, or storing it in the insured's garage operations. Now, since the insured has direct primary coverage, the legal liability part of this agreement is not relevant to the coverage question. The direct primary coverage is basically goodwill coverage since it allows the insured to pay (through the insurance policy) for damages done to a customer's car as a goodwill gesture since the direct primary basis means there is no need to prove the insured was legally liable for causing the damage. The insured pays extra premium for this coverage and it is meant to engender goodwill among the insured's customers.

As for the rest of the insuring agreement, there was damage to a customer's car. The garagekeepers insuring agreement and the definition of a customer's auto in the policy do not say anything about or describe what it means to be a customer. And, based on what you say, the claimant did business with the insured over a period of time; in other words, he fulfilled the dictionary definition of customer in that he purchased the service or products of the insured. He was established as a customer and he did not cease to become one just because the insured was not at the time working on or repairing the auto. And again, the insured was towing the car in hopes of securing future business with the claimant, in hopes of having the claimant continue to be a customer. Your insured and the claimant no doubt feel as if a customer relationship was established and the insurer is simply being too strict in its interpretation of the situation.

The customer's car was left in the insured's care; there is no question about that. The insured was not servicing, repairing, parking, or storing the car; we can all agree on that point. However, was the insured attending the auto? There is no definition in the policy about attending. The dictionary defines attending as “to pay attention to; to look after; to take charge of; to be present with; to be ready for service; to direct one's attention to”. Since the insured had the claimant's car in his custody, he was taking charge of it and he was looking after it and he was paying attention to it. The insured was attending the claimant's car in accordance with the ordinary commonly accepted definition of attending. Unless the insurer can show that attending means something else in your area, the insured was attending the claimant's car at the time of loss.

That leaves the garage operations definition. The insurer is just looking at one part of the definition. Garage operations does mean what the insurer says it does, but it also means the ownership, maintenance, or use of the autos indicated as covered autos. You indicated that the tow truck was a scheduled auto, a covered auto, on the policy. And who is to say what the insured considers as necessary or incidental to his garage business? The insurer is not equipped to say this since the garage business is not the insurer's business. It is not as if the insured was selling clothes or building bridges or doing something entirely foreign to the garage business. A garage business tows autos. That can be reasonably seen as part of the garage operations.

Finally, there is no exclusion on the policy that would prevent coverage in this instance. The insuring agreement has been met and there is no exclusion that would apply. The insured has coverage for this claim.