Why Proper Customer Vehicle Values Matter on the OAP 4 for Repair Shops

Why Proper Customer Vehicle Values Matter on the OAP 4 for Repair Shops

For repair shops and garages, one of the biggest OAP 4 exposures is not owned inventory, but customer vehicles left in the shop’s care, custody or control. Section 6 of the Ontario Garage Automobile Policy is the part that responds to damage to a customer’s automobile while it is in the insured’s care, custody or control, which makes accurate customer vehicle values critical for garages, body shops, service centres, and similar operations.

The practical issue is simple: if a shop regularly has more customer vehicles on site, or higher-value vehicles on site, than the policy contemplates, a loss can create an immediate coverage shortfall. That is why garages need realistic values for customer vehicles on the lot, in the compound, inside the shop, or awaiting pickup.

Why this matters

A lot of repair shops focus on liability, tools, and building coverage, but the customer auto exposure can be just as important. One hailstorm, fire, vandalism event, or overnight lot loss involving multiple customer vehicles can quickly show whether the Section 6 limit was set properly.​

If the limit is too low for the number and value of customer vehicles normally in the shop’s care, the business may not have enough insurance available to respond to the full loss. Even without getting deep into policy math, that is the core message for garage clients: inaccurate values can turn a covered claim into a painful uninsured balance.

A garage example

Think of a repair shop with 20 customer vehicles onsite on a busy week, including several newer pickups or SUVs waiting for parts. If vandalism hits the lot overnight or a fire damages multiple customer units, the issue is no longer just whether the shop has Section 6 coverage; the issue is whether the limit reflects the real total value of customer automobiles in the shop’s care, custody or control at that location. ​

That is especially important for shops that handle fleet work, commercial vehicles, higher-end personal vehicles, or seasonal volume spikes. A garage may feel comfortable because the average number of vehicles is manageable, but one busy period with several high-value units can materially change the exposure.

Value, not just count

This is where brokers can add real value. The exposure is not only how many customer vehicles are onsite, but what those vehicles are worth at any one time.

Ten older sedans do not present the same exposure as ten late-model trucks, EVs, or luxury SUVs. If the shop’s operations have changed, DRP volume has increased, or the business is taking in more expensive vehicles than before, the Section 6 limit should be reviewed before a claim happens. ​

Good advice for garages

A solid garage review should ask:

• How many customer vehicles are onsite during an average week?

• What is the peak number during busy periods?

• What is the approximate total value of those vehicles at peak times?

• Are there higher-value units, fleets, or specialty vehicles that push the exposure up?

• Are all storage areas and lots being contemplated properly? ​

For garages, the lesson is straightforward: do not treat customer auto values as a rough guess. On an OAP 4, proper limits for customer vehicles in the shop’s care, custody or control can make the difference between a claim that is manageable and one that becomes a serious financial problem for the insured.

Simple math example

A simple way to explain this to a garage client is with a partial loss. Suppose a shop has customer vehicles onsite with a total value of $400,000, but the Section 6 limit effectively in place is only $200,000. Then, an overnight vandalism or fire claim causes $40,000 damage to several customer vehicles. The shop has enough insurance to cover approximately half the claim, less the deductible. That is only part of the overall exposure, so the claim can quickly become a shortfall problem rather than a straightforward recovery.

The same issue gets worse when the most expensive units are understated. For example, a shop may think its lot is fine based on average vehicles, but if several newer trucks, EVs, or luxury SUVs are onsite and the real customer auto values are much higher than expected, even a partial loss to only a few of those vehicles can eat up a low Section 6 limit very quickly. The simple lesson is that low overall values and underestimating the highest-value customer vehicles both leave repair shops exposed when a multi-unit loss hits.