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 to indicate coverage on scheduled or specifically described autos.

 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; however, 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.

 Interests to be covered by physical damage insurance must be carefully designated in the insured’s declarations, item seven. 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.

 Coverage

 1.We will pay for “loss” to a covered “auto” or its equipment under:

a.Comprehensive Coverage. From any cause except:

(1)The covered “auto’s” collision with another object; or

(2)The covered “auto’s” overturn.

b.Specified Causes of Loss Coverage. Caused by:

(1)Fire, lightning or explosion;

(2)Theft;

(3)Windstorm, hail or earthquake;

(4)Flood;

(5)Mischief or vandalism; or

(6)The sinking, burning, collision or derailment of any conveyance transporting the covered “auto”.

c.Collision Coverage. Caused by:

(1)The covered “auto’s” collision with another object; or

(2)The covered “auto’s” overturn.

2.Glass Breakage – Hitting a Bird or Animal – Falling Objects or Missiles.

If you carry Comprehensive Coverage for the damaged covered “auto”, we will pay for the following under Comprehensive Coverage:

a.Glass breakage;

b.”Loss” caused by hitting a bird or animal; and

c.”Loss” caused by falling objects or missiles.

However, you have the option of having glass breakage caused by a covered “auto’s” collision or overturn considered a “loss” under Collision Coverage.

3.Coverage Extension—Loss of Use Expenses

For Hired Auto Physical Damage, we will pay expenses for which an “insured” becomes legally responsible to pay for loss of use of a vehicle rented or hired without a driver, under a written rental contract or agreement. We will pay for loss of use expenses if caused by:

a.Other than collision only if the Declarations indicate that Comprehensive Coverage is provided for any covered “auto”;

b.Specified Causes of Loss only if the Declarations indicate that Specified Causes of Loss Coverage is provided for any covered “auto”; or

c.Collision only if the Declarations indicate that Collision Coverage is provided for any covered “auto”.

     However, the most we will pay for any expenses for loss of use is $20 per day, to a maximum of $600.

 Analysis

 Section IV may be used to write comprehensive coverage (“comp”), specified causes of loss coverage, or collision coverage. The comprehensive agreement promises to pay for direct and accidental loss to covered automobiles from any cause except collision (or) overturn. If comprehensive insurance is selected, glass breakage, loss by missiles or falling objects, and colliding with a bird or animal will be treated as comp claims instead of collision. If comprehensive is not applicable, the impact between covered auto and falling object or between covered auto and bird or animal reverts to what it actually is, collision, and whatever coverage is applicable to collision damage applies to the incident.

 If it is to the insured’s advantage to recover for glass breakage as collision, the insured may do so. Comp and collision may each be subject to a deductible. This option under the garage coverage form for the insured allows glass breakage that occurs in a collision to be treated as part of the collision insurance claim, all subject to only the collision deductible.

 The specified causes of loss are listed in the form: fire, lightning, or explosion, theft, windstorm, hail, earthquake, flood, vandalism or mischief, and the transportation peril of “sinking, burning, collision, or derailment” of any conveyance (including boats and aircraft) transporting an insured auto.

 Note that smoke damage or smudge from a malfunctioning heater on the premises is not covered by specified perils. Also, except for flood, water damage is not included in specified causes of loss coverage. Nor is loss caused by falling aircraft. Though the incidence of damage to automobiles by any of these perils is undoubtedly rare, they represent valid points of consideration in the insured’s decision between specified causes of loss and comprehensive perils coverage.

 If the insured prefers, specified causes of loss coverage can be replaced by a special endorsement, CA 25 04, that modifies the perils selection in various ways. For a more detailed description see Garage Policy Endorsements.

 Collision is, of course, the other major peril the insured can choose to include in physical damage protection. The coverage agreement specifies that the term refers to overturn of the covered auto as well as its collision with another object. For more information on collision, see What is Collision.

 The current garage form has the loss of use expenses coverage that is also present on the business auto coverage form. And, CA 00 05 also now pays up to $20 per day for such expenses up to a maximum of $600. For more information on this item, see Business Auto Form—Physical Damage Coverage.

 Exclusions