An insured owns a machine shop where they rebuild and repair engines and other parts for cars and boats. Customers bring their engines into the shop and then pick them up when the job is finished. The insured does not keep any vehicles on the premises and does not install the engines back into the vehicles for the customer. 

Q: Two questions: First, how do I insure the customer's property while it is on the insured's premises, including damage sustained while the insured is working on it? Second, how do I insure damages related to the insured’s completed operations—if, for example, something goes wrong once the engine is back in the vehicle, and it’s attributable to the insured’s negligence? Would the engine be covered? What about the vehicle itself? Does this insured need garagekeepers or garage liability coverage?

Response 1: A commercial general liability policy covers completed operations once the repair is made and the engine is replaced in the vehicle. Any bodily injury or property damage that results from the repair, other than the typical "your work" exposure, would also be picked up by the CGL, as long as no other exclusion applies. The insured should have a sufficient limit for the property of others built into their building and personal property limit to insure the engine while it’s at the shop.

Garagekeepers coverage is only necessary if the insured has customers' vehicles in their care, custody or control, which doesn’t seem to be the case.

Response 2: Declare a limit for the personal property of others and insure the maximum exposure. Products or completed operations coverage will cover damages arising from the insured’s completed work—excluding the item that causes the damage. 

Response 3: If the business operates exactly as you've described, they don't need garagekeepers or garage liability coverage. To insure the customer's goods while they are in the insured's care, a bailees policy would be the answer. Ask your inland marine underwriter about that.

A lot has been written about the “your work,” “your product” and related exclusions. To learn more, read the CGL exclusions and refer to resources like the Big “I,” FC&S and the International Risk Management Institute.

Response 4: Virtually all standard policies, whether property or liability, have workmanship exclusions. It's a business risk that is rarely insurable or affordable. If consequential damage occurs after the engine is installed, that's simply a products or competed operations claim under the CGL policy.

Response 5: Your insured needs a CGL policy. You can usually add coverage—with appropriate limits—for the property of others to the building and personal property coverage form to insure an engine while it’s in the insured’s custody. Of course, it’s limited to the covered causes of loss.

In respect to the engine after repair, check that the CGL doesn’t specifically exclude damage to “your work,” such as if a fire starts in the engine and then destroys the car.

Response 6: The engines would be handled as property of others in the care, custody, or control of the insured. The insured needs to determine if they want to be covered for legal liability only, or if bailees coverage would be appropriate. Several inland marine policies provide bailees coverage, such as the AAIS IM 7501 04 04 Miscellaneous Bailee – Processor Floater or the ISO IH 00 85 09 09 Bailees Customers coverage form.

This question was originally submitted by an agent through the VU’s Ask an Expert Service, with responses curated from multiple VU faculty members. Answers to other coverage questions are available on the VU website. If you need help accessing the website, request login information.