Is it Personal Auto, Business Auto, Garage, or None of the Above?
Sometimes you just have think that insurance is just all gobbledygook. Here is a classic example.
This all began last month when my husband, Ray, and I were going on a long planned trip to Europe for several weeks. Ray had researched all the parking facilities at Los Angeles International Airport (LAX) and proudly told me he had found the cheapest deal going. It was a new company where you drive to the facility, one of their employees then gets behind the wheel of your car and drives you to the airport in your own vehicle. When you return the employee again drives your car to pick you up and bring you back to the parking facility where they store the cars. This is very different from all the other parking facilities at LAX that have their own vans that they use for pick-up and delivery. So now the wheels of my insurance brain are churning as this unknown driver gets behind the wheel of my brand new Infinity. So I turned to Ray and asked him if he read the agreement he signed as to who is responsible for any damage and/or liability while my car was in the drivers care. The answer was a definite NO and so the vacation began.
My thoughts first went to damages to my own vehicle and then any liability as a result of an accident while the parking company’s employee was driving my vehicle. The liability on the PAP makes the broad statement: “We will pay damages for “bodily injury” or “property damage” for which any “insured” becomes legally responsible because of an auto accident”.
OK – is this driver an “insured” and are we still covered? The liability agreement lays out Who Is An Insured and includes any person using “your covered auto”. OK – so far so good. My Infinity is definitely on our auto policy and this certainly would be a person using that car.
On to the exclusions: The first exclusion that is going to cause trouble is the “livery” exclusion which says there is no liability coverage:
For that “insured’s” liability arising out of the ownership or operation of a vehicle while it is being used as a public or livery conveyance.
So when I “pay” someone to take me to the airport in my vehicle is the car then being used as a “livery” service? I then look to find a definition of livery and there is none to be found in the policy. I look to the dictionary for “livery conveyance” which stated:
“The term livery of conveyance refers to the transporting of people or goods for hire”.
Trouble-I knew this was trouble! This exact question was a topic discussed in Independent Agent Magazine in an article titled “The Public or Livery Conveyance Exclusion” published in June 2008 (http://www.iamagazine.com/Magazine/2008/June/Forms_Substance.aspx)
The article starts out by stating:
“The ISO PAP excludes vehicles being used as a public or livery conveyance for liability, medical payments and physical damage.”
The specific question in the article dealt with “If you pay someone to drive you to the airport in your own vehicle and that paid driver has an accident, would the paid driver have any coverage under your policy? Would you have any coverage? Would the paid driver have any coverage under his own auto policy? The drivers offer their services via a concierge business. They will drive the vehicle owner to the airport in the owner’s vehicle for a fee.”
The next exclusion that is trouble says that an insured is not covered for liability while employed or otherwise engaged in the “business” of storing or parking a vehicle and this exclusion includes delivery. Well, that pretty much sums up the situation for the parking company employee. No coverage under our Personal Auto Policy.
What about us? You know if the parking company’s employee causes an accident the vehicle owner is certainly going to get sued. The livery exclusion has been a subject of controversy in various courts, so the best answer I have is: Maybe.
So, because those of us in the business of insurance think just a little differently from “normal” folks, my brain then turns to the problem of the employee damaging my beautiful Infinity. So next I look at the physical damage end of my policy for damage to my own vehicle which seems to work in the event my damage is done in the collision with one “minor” detail. My husband opted for a $2500.00 deductible on MY new car. Things are not looking good here!
Now that I have checked out my own insurance policy and understand that Ray and I at least have coverage for the accident I am sure is going to happen with my new car what about the parking garage? Where is their responsibility? What about their coverage?
I ask Ray for a copy of the agreement he signed which he reluctantly handed over to me. It was only one page which is scary in and of itself. And there on the bottom in bold print it says: “we are only responsible for a total of $250.00 for any property damage or liability losses to vehicles while in storage or while being driven by the company’s employees.” It did go on to say they had no liability for any known defects or mechanical issues. So there it is, which answers why we got such a deal. Our personal auto policy will cover the physical damage, but we would be on the hook for $2500 and the parking company is only liable for $250.00. Maybe that is why it was so CHEAP!
Now, to finish this story we have to turn to commercial insurance. Should the parking garage have insurance for all of this? You bet. What coverage would that be? Sounds like Garage Liability as well as Garagekeeper’s Physical Damage Coverage to me. Why both? Well, the Garage Liability policy covers the liability of the parking garage (including the employee) for such things as parking or storing vehicles while the Garagekeeper’s Physical Damage coverage will respond for damaging my car. Both of these coverages are written using Symbols to respond to certain types of vehicles. The best possible combination of Symbols would be Symbol 21 on the Garage Liability policy which will cover the use of “any auto” (pretty broad, huh?) and Symbol 30 on the Garagekeeper’s coverage which will cover any auto left with you for …storage or safekeeping. The last little issue is what type of Garagekeeper’s coverage was purchased by the parking garage? There are three choices of coverage: (1) Legal Liability (2) Direct Primary (3) Direct Excess. Of the three, the most customer friendly choice is #2 since this coverage does not require any negligence and pays whether or not the customer has their own “comprehensive” or collision coverage. Who knows what coverage (if any) this parking garage carries? Only their broker knows.
How many people happily turn their vehicle over to a total stranger, never asking whether or not the facility has any insurance and blithely go on their way through the horror of getting through security? Thank goodness, all ended well. But – if it hadn’t? Well, at least we had a terrific vacation.