Garage Auto Policy (OAP 4)

Garage insurance is a form of commercial auto insurance specifically designed for businesses that maintain, sell, service or store vehicles for customers.

What does a Garage Auto Policy Cover?

In Ontario, the Garage Automobile policy covers third-party liability from death, bodily injury, property damage to others, accident benefits, and legal liability for physical damages to a customer’s vehicle, while in the insured care custody or control. 

Purpose of the Garage Auto Policy

Garage businesses that accept vehicles belonging to others into their care, custody and control require specific insurance coverage. The Ontario Garage Automobile Policy (OAP 4) fills the gap where the owner’s policy (OAP 1) cannot provide coverage. 

The owner’s policy (OAP1) has an exclusion for garage staff who are in the business of selling, repairing, maintaining, storing, servicing, or parking automobiles, as part of a business.

Example 1: An auto mechanic test drives a customer’s vehicle after a repair and is involved in an at-fault car accident. The owner’s policy excludes coverage since the mechanic was in the care, custody and control of the customer’s vehicle. The Garage policy supersedes the exclusion and would respond to the loss.

Example 2: a valet parking employee hits a cement pole while attempting to park the vehicle. The OAP 1 excludes coverage as the valet employee was in the care, custody and control of the vehicle, while the garage policy does not. 

Section 1.8.4 of the OAP 1 states: put the exclusion here

Coverage for Owned Vehicles –  the Ontario Garage Automobile policy not only covers third-party liability but also extends coverage to owned vehicles. Depending on the optional loss coverage you choose, All Perils, Collison, and Specified Perils, will apply to loss or damage to vehicles that the policyholder owns. 

Coverage for Customer’s Vehicle – the Ontario Automobile policy covers damage or loss to the customer’s vehicle while in the care, custody and control of the insured. 

Sections of the Ontario Garage Auto Policy

• Third-party liability
• Accident Benefits
• Uninsured automobile coverage
• Direct Compensation Property Damage
• Loss or damage to owned automobiles
• Liability for damage to a customer’s automobile, while in the care, custody and control of the insured
• General provisions, definitions and exclusions
• Statutory conditions 

Types of Businesses that Need Garage Automobile Liability Insurance

Many types of businesses can benefit from Garage automobile liability insurance. 

Some businesses include: 

• Autobody repair shop
• Parking garages and service (Valet)
• Mechanic repair shop
• Towing companies
• Car dealerships
• Auto detailers
• Auto glass repair shop

How much does garage insurance cost? 

The cost of garage automobile insurance in Ontario varies according to the type of business being underwritten and the risk associated with that business. 

Factors that affect the cost of garage auto insurance in Ontario  

• Size of fleet
• Nature of business
• Risks associated with the business
• Amount of coverage purchased
• Endorsements to either add or remove coverage
• Cost to replace fleet/scheduled vehicles
• Risk profile of driver’s/employees
• Operating radius

Conclusion

The garage automobile insurance policy in Ontario was designed to address the care, custody and control exclusion in the owner’s policy OAP 1.  The Garage policy provides third-party liability and optional loss coverages for owned vehicles, similar to the owner’s policy, OAP (1). The garage policy also provides coverage for non-owned/customer vehicles, while in the care custody and control of any staff.