This case contributes to a better understanding of the scope and limitations on garage liability coverage, made effective by the entry of symbols that designate autos that are "covered autos." Questions arose over application of coverage to garage operations incidental to the use of "covered autos."

The owner of an automotive radiator repair shop, who included minor engine repair, welding and farm tractor repair in his services, carried liability coverage under a garage policy that was implemented, in the declarations, by the entry of symbol "29" next to "liability coverage." This meant that the only "covered autos" were those "....you do not own, lease, hire, rent or borrow used in connection with your garage business...." It was acknowledged that the insured had an option to include coverage for owned autos by entry of another symbol, but had declined it.

The garage owner purchased a dune buggy and modified it by welding additional framework onto the chassis to extend the wheelbase. A prospective purchaser took it for a test drive, the front end disengaged from the chassis when one of the welds allegedly broke, and the driver was injured when thrown clear. He sued the garage owner, alleging that his injuries were caused by negligent modification of the dune buggy.

The owner's garage liability insurer, when asked to provide defense, sought a declaratory judgment that the policy, as written, did not cover the incident and that the insurer did not have a duty to defend a lawsuit. Judgment in favor of the insurance company was appealed.

The injured man argued that the modification was covered because it was an operation "necessary or incidental" to the insured's garage business. It was noted that the term "garage operations" was defined to include "....the ownership, maintenance or use of the 'autos' indicated ....as 'covered autos.' Garage Operations also include ....all operations necessary or incidental to a garage business."

The claimant acknowledged that coverage for auto accidents was limited to those involving "covered autos," but that the dune buggy modification brought the occurrence within the scope of the policy's liability coverage. He argued that any uncertainty or ambiguity must be construed in favor of coverage.

The appeal court cited two cases associated with similar coverages and circumstances: Koo v. Parker, 295 So.2d 463 (La. App. 1974); Universal Underwriters Ins. Co. v. Weber, 701 S.W. 2d 588 (Mo. App. 1985). The court in "Koo" said that the ambiguity argument had "....no applicability here because the policy form, as constructed and completed, leaves no room for doubt as to the hazard for which a premium was charged and coverage thereby afforded." The insured had chosen non-owned auto coverage and rejected coverage for owned autos.

The appeal court here found that the insured had rejected coverage for owned autos. The terms of the selected coverage were clear and not vulnerable to the ambiguity argument. The judgment of the trial court was affirmed in favor of the insurance company and against the insured and the third party claimant.

(AMERICAN ECONOMY INSURANCE COMPANY, Plaintiff-Respondent v. OTTE ET AL., Defendants-Appellants. Missouri Court of Appeals, Eastern District, Southern Division. No. 63591. November 30, 1993. CCH 1993-94 Fire and Casualty Cases, Paragraph 4613.)