Under a garagekeepers coverage, who has the right to control the defense and settlement of covered claims?

• A. The insured
• B. The insurer
• C. The customer
• D. The court

Answer: (B)

The insurer has the right to control the defense and settlement of covered claims. In garagekeepers coverage, the insurance company bears the defense costs and the risk for claims involving customers’ vehicles in the insured’s care, custody, or control. Because of that responsibility, the insurer hires the defense counsel, makes strategic decisions about how to defend, and negotiates settlements (often subject to policy limits or insurer approval for higher settlements). The insured is expected to cooperate and provide information, but does not have the final say in defense strategy or settlements. The court or the customer does not control the defense; those decisions rest with the insurer.