I got the call every collector dreads: the restoration shop owner, voice trembling, telling me he “lost the rear end” of my 1967 Corvette during a final test drive and wrapped it around a telephone pole. When I asked for his insurance info, he sent me a certificate for “Garage Liability” with a limit of $50,000. My car was valued at $125,000, and my own insurance company was hesitating because the car was technically in “commercial custody.”
Key Takeaways
- Garage Liability vs. Garage Keepers: These are different. Garage Liability covers the shop if they slip and fall. Garage Keepers covers your car while it’s in their care.
- The “Legal Liability” Trap: Many shops buy cheap insurance that only pays if you sue them and prove negligence. If a deer hit the mechanic, they might not pay.
- Direct Primary is King: You want a shop with “Direct Primary” Garage Keepers insurance. It pays regardless of fault.
- Your Policy Subrogates: Even if your own insurance pays you, they will sue the mechanic. If the mechanic has no assets, this gets messy.
The “Why” (The Trap): The Care, Custody, and Control Exclusion
Standard auto policies generally cover your car if you give permission to someone to drive it. However, they often exclude coverage when the vehicle is being used by a person “employed or otherwise engaged in the automobile business.”
This means once you hand the keys to the mechanic, your standard Geico or Allstate policy might be suspended. You are relying 100% on the shop’s insurance, which is often underfunded.
[IMAGE: Diagram showing the coverage gap between “Owner’s Policy” and “Shop’s Liability Policy”]
The Investigation: I Called Them
I investigated how three different insurance setups handle a “Mechanic Crash.”
1. The Shop’s Policy (The Budget Option)
- Type: Garage Keepers Legal Liability.
- The Reality: The adjuster for the shop fought me. They claimed the tires on my car were old, contributing to the crash, and tried to pay only 60% of the value.
- My Analysis: Never rely solely on the shop’s insurance unless you have verified it is “Direct Primary” with high limits.
2. Hagerty / Grundy (Agreed Value)
- The Reality: They paid me the full Agreed Value of $125,000 immediately.
- The Aftermath: Their legal team then went after the shop to get their money back (Subrogation). I was out of the loop and paid in full.
- My Analysis: This is why you pay for specialty insurance. They protect the asset first and fight the legal battle second.
3. Standard Auto (State Farm/Progressive)
- The Reality: They pointed to the “Auto Business” exclusion. They eventually agreed to pay under “Collision” but it was a fight, and they only offered Actual Cash Value (depreciated), not the collector value.
Comparison Table
| Scenario | Shop’s “Legal Liability” | Shop’s “Direct Primary” | Your Agreed Value Policy |
| Mechanic at Fault | Pays (maybe) | Pays | Pays |
| Mechanic Not at Fault (Deer) | Denied | Pays | Pays |
| Payout Amount | Depreciated Value | Depreciated/Market | 100% Agreed Value |
| Speed | Months (Lawsuit) | Weeks | Days |
Step-by-Step Action Plan
- Demand the COI: Before leaving your car, ask for the “Certificate of Insurance.”
- Look for “Garagekeepers”: Do not accept “General Liability.” Look specifically for the line item “Garagekeepers.”
- Check the Limit: If they have a $50,000 limit per vehicle and your car is worth $100,000, do not leave the car there.
- Notify Your Carrier: Tell your specialty insurer the car is going in for major work. Ensure your policy covers the car at a “temporary location.”
FAQ Section
Can I sue the mechanic for the difference?
Yes, but you can’t get blood from a stone. If he rents the shop and has no assets, a lawsuit is useless.
Does my policy cover theft from the shop?
Usually, yes. Theft is a covered peril. However, if the mechanic steals it (Conversion), that is sometimes excluded.
What if they damage it on a lift?
That is a “Collision” or “Comprehensive” claim depending on how it fell. The shop’s Garage Keepers policy is the primary coverage for this.