12.4 Garage Coverage Form and Garagekeepers

The Garage Coverage Form (CA 00 05)

Auto dealers, repair shops, service stations, and parking operations have a hybrid exposure: they have an auto exposure (their own vehicles and customer test drives) AND a premises/operations exposure (someone slips on the lot; a faulty repair causes a crash). The Garage Coverage Form (CA 00 05) combines all of this into one policy.

It provides:

• Garage liability — auto-related liability using covered-auto symbols, PLUS general liability for garage operations (premises and products-completed operations).
• Garagekeepers — for customers' autos in the garage's care.
• Physical damage — for the garage's owned autos and, for dealers, inventory.

Garagekeepers Coverage

A standard CGL excludes property in the insured's care, custody, or control. But a repair shop holding 40 customer cars overnight has exactly that exposure. Garagekeepers fills the gap: it covers the garage's liability for loss to a customer's auto left in its care for service, repair, storage, or parking.

Three Coverage Bases

Trap: On a legal liability basis, if a customer's car is stolen with no fault by the garage, there is no payment — the garage was not negligent. On a direct primary basis, the same theft IS paid.

Worked example

Hail damages eight customer cars in a lot, each $3,000, total $24,000. Garagekeepers is direct primary, $50,000 limit, $250 per-auto deductible. Payment = $24,000 − (8 × $250) = $24,000 − $2,000 = $22,000.

Dealers' Physical Damage and Liability Structure

For auto dealers, physical damage on inventory can fluctuate daily as cars are bought and sold. Dealers use dealer and non-dealer covered-auto symbols and may write physical damage on a reporting-form basis, submitting monthly inventory values so the premium tracks actual exposure.

Liability split

Garage liability separates two exposure types:

• Auto exposures — use covered-auto symbols (Any Auto, owned, etc.), similar to the BAP.
• Operations exposures (other than auto) — premises and products-completed operations for the garage's repair and service work. A defective brake job that later causes a crash is a products-completed operations claim, not an auto claim.

The newer Auto Dealers Coverage Form (CA 00 25) consolidates dealer auto and general-liability needs and has largely replaced CA 00 05 for franchised dealers, but the classic Garage Coverage Form remains exam-relevant for service and parking operations.

Garagekeepers: The Three Coverage Options

Garagekeepers coverage protects a garage business for damage to a customer's auto left in its care, custody, or control. Because a customer's car is the property of another, it is excluded under the garage liability section and needs this separate grant. The exam tests the three coverage bases:

Covered causes of loss are typically fire, theft, explosion, vandalism (the specified causes of loss) and collision/upset if elected.

Worked Example: Hailstorm at the Dealership

A hailstorm damages 12 customer vehicles parked on a dealer's lot awaiting service. The dealer was not negligent — hail is an act of nature.

• Under legal liability garagekeepers, the insurer pays nothing, because the dealer is not legally at fault.
• Under direct primary garagekeepers, the insurer pays for the hail damage regardless of fault, subject to the per-location limit and deductible, and it pays primary to each customer's own auto policy.
• Under direct excess, the insurer pays only after each customer's personal physical-damage coverage is exhausted.

Trap: the exam often hides the words not negligent in the fact pattern — if the basis is legal liability, the answer is no payment; if direct coverage, the insurer pays.

Dealers vs. Service Risks and the LIABCON Distinction

The Garage Coverage Form (CA 00 05) combines auto liability, general liability arising from garage operations, and (optionally) garagekeepers and dealers physical damage into one form for auto dealers, repair shops, and service stations. The Auto Dealers Coverage Form (CA 00 25) is the broader modern form for franchised/used-car dealers, adding dealers physical damage (false-pretense, theft, collision on the dealer's own inventory) and broadened liability.

A crucial distinction: garage liability covers BI/PD the business causes to third parties, while garagekeepers covers damage to customers' autos in the shop's care. Damage to the dealer's own inventory is neither — it needs dealers physical damage. Worked example: a fire in the service bay destroys two customer cars (garagekeepers responds), injures a customer (garage liability responds), and burns three cars on the dealer's sales lot (dealers physical damage responds). Trap: one fire can trigger three different coverage grants depending on whose property/person is harmed.