Which loss is covered under the physical damage section of a garage policy?

The physical damage section of a garage policy is designed to cover damages incurred by vehicles that are in the care, custody, or control of the garage owner, as well as those vehicles owned by the garage owner. In this situation, damage caused by vandals to a covered auto while it is on the garage owner's lot is included under this section because it directly affects a vehicle that the garage is responsible for.

This coverage acknowledges the risk of liability and property damage that garages face while they have customers' vehicles on their premises. Vandalism falls squarely within the kinds of unexpected and malicious damage that a garage might encounter while vehicles are in their custody, thus being covered under the physical damage provisions of the policy.

The other choices deal with scenarios that either involve conditions where coverage may be excluded—such as participating in a race—or situations that are not considered physical damage under the garage policy—like diminution in value after repairs. This reinforces the importance of understanding the specific coverage provided by garage policies and the conditions under which they apply.