Vehicle damaged in garage custody: who pays the claim?
An insured car is at the workshop for repair and, while in the garage's custody, it is damaged — a fire, a theft, or mishandling by the staff. The owner looks to the insurer; the insurer looks at the garage. Here is how a surveyor thinks through it.
In short
- Handing a vehicle to a garage creates a bailment — the garage (bailee) owes a legal duty of care.
- If the loss is from an insured peril (e.g. fire), the own-damage policy can respond even while the vehicle is at the garage.
- If the loss is from the garage's negligence, the garage is primarily liable; an insurer who pays can recover from the garage by subrogation.
- The surveyor's job is to establish how the loss happened and whether it is an insured peril or third-party negligence — the facts decide everything.
The situation
The scenario is common. A vehicle is left at a workshop — for a service, body repair, or an earlier accident repair. Before it is returned, something goes wrong inside the garage: a short circuit starts a fire, the vehicle is stolen from the premises, or a technician damages it during handling or a test drive. The owner has an own-damage (OD) motor policy and files a claim. Two questions immediately arise: is the loss payable under the policy, and if someone else was at fault, who ultimately bears the cost?
Step 1 — Recognise the bailment
When an owner hands over a vehicle for repair, the law treats it as a contract of bailment. The owner is the bailor and the garage is the bailee. Under the Indian Contract Act, 1872, a bailee must take as much care of the goods as a person of ordinary prudence would take of their own goods of the same kind. If the bailee fails in that duty and the vehicle is damaged or lost, the bailee can be held liable — unless the bailee shows the loss happened despite reasonable care.
Step 2 — Ask what actually caused the loss
The policy responds to perils, not to places. The vehicle being at a garage does not, by itself, exclude a claim. What matters is the proximate cause:
- Fire, lightning, explosion — these are standard insured perils under a motor OD policy. A fire at the workshop that damages the insured vehicle is generally within the scope of cover, subject to the policy terms.
- Theft — theft of the vehicle from the garage is an insured peril, though the insurer will look closely at how it happened and who held the keys.
- Mishandling / accident inside the premises — damage caused by the garage's staff (a drop from a lift, a collision during a test drive) points to the garage's negligence rather than a fortuitous insured peril.
Step 3 — Separate "payable" from "recoverable"
These are two different questions, and mixing them up is where errors creep in.
Is it payable?
Decided by the policy: is the proximate cause an insured peril, within the sum insured, and free of any applicable exclusion?
Is it recoverable?
Decided by fault: if a third party (the garage) caused the loss by negligence, the insurer who pays the owner can step into the owner's shoes and recover.
So an insurer may pay the owner for a fire loss and separately pursue the garage if the fire was caused by the garage's negligence. This is subrogation — the insurer's right, after indemnifying the insured, to recover from the party responsible for the loss.
Step 4 — What the surveyor documents
A garage-custody loss lives or dies on the facts, so the survey record should let the insurer decide both payability and recovery without re-visiting the site:
- Why and since when the vehicle was at the garage — the job card, estimate and the original reason for the visit.
- A clear account of how the loss occurred, with photographs, the point of origin (for fire), and any statements.
- Whether the loss is consistent with an insured peril or with negligence in the garage's custody — and the reasoning.
- Custody facts: who held the keys, security at the premises, and whether the vehicle was inside or in an open yard.
- The pre-existing damage (the repair the vehicle came in for) kept separate from the fresh loss, so the two are never mixed in the assessment.
A quick worked example
Suppose a car is at a workshop for a minor dent repair when an electrical fault starts a fire that burns the front half. The fire is an insured peril, so the OD policy can respond for the fresh fire damage (the dent repair stays out of it). If investigation shows the fire began in faulty workshop wiring, the insurer, after paying the owner, may recover from the garage as the negligent bailee. The surveyor's report is what makes both steps possible — it establishes the peril and preserves the evidence of negligence.