12.4 Garage Coverage Form and Garagekeepers

The Garage Coverage Form (CA 00 05)

Auto dealers, repair shops, service stations, parking facilities, and body shops have a blended exposure: they have auto liability (test-driving, moving customers' cars) AND general liability (premises, products/completed operations) AND a bailee exposure for customers' cars in their care. The Garage Coverage Form (ISO CA 00 05) packages these into one form. (Franchised new-car dealers more often use the broader Dealers form / CA 00 25 plus the Garage auto pieces.)

The Garage form has three principal coverages: Auto-related liability, General (premises/operations) liability for the garage business, and Garagekeepers coverage for damage to customers' autos left in the insured's care.

Garagekeepers Coverage – the three options

Garagekeepers responds to physical damage to a customer's auto in the insured's care, custody, or control. Three coverage triggers can be selected, in order of breadth and cost:

1. Legal Liability – pays only if the insured is legally liable (negligent) for the damage. Cheapest.
2. Direct Primary – pays for covered damage whether or not the insured is liable, and pays before the customer's own insurance.
3. Direct Excess – pays for covered damage whether or not liable, but only excess over the customer's own collision/comprehensive coverage.

Garagekeepers covers the same perils as auto physical damage: comprehensive (or specified causes of loss) and collision, each with its own deductible (often a small per-auto deductible plus a larger per-loss/event deductible for theft and vandalism).

The Garagekeepers limit of insurance is shown per location and is the most the insurer pays for all customers' autos damaged in one event—so a hailstorm flattening 40 cars on the lot is capped at that single per-location limit, not multiplied by the number of cars. Selecting too low a limit relative to peak inventory on the lot is the classic underinsurance trap for service stations and dealers.

Worked example – Direct Excess vs. Legal Liability

A customer's $30,000 car is destroyed by fire in the insured's shop. The customer carries comprehensive insurance with a $500 deductible; the shop's Garagekeepers has a $250 deductible.

• Legal Liability basis: If the fire was NOT the shop's fault (e.g., spontaneous electrical fault in the customer's own car), the shop owes nothing—so Garagekeepers Legal Liability pays $0. The customer relies on their own policy.
• Direct Excess basis: The customer's insurer pays $30,000 − $500 = $29,500 first. Garagekeepers then covers what the customer's policy did not—here the $500 deductible, minus the shop's $250 Garagekeepers deductible = $250 (the shop pays excess only).
• Direct Primary basis: Garagekeepers pays first: $30,000 − $250 = $29,750, regardless of fault, then may subrogate.

Garage liability exclusions and traps

• The garage liability section excludes damage to property the insured owns, rents, occupies, or has in their care—that gap is exactly what Garagekeepers fills.

• Customers as insureds: a customer driving a covered auto is an insured only if they have no other available insurance, and then for the state minimum limits only.

• Products and completed operations (a faulty brake job that causes an accident after the car leaves) are covered under the garage general liability part, not the auto part.

• A used-car lot's inventory (autos held for sale) is the dealer's own physical-damage exposure—insured under Dealers physical damage / false pretense, NOT Garagekeepers, which is only for customers' autos.

How the Garage Program Fits Together

The value of the Garage Coverage Form is that it solves a coverage puzzle no single standard policy handles. A service station faces four distinct exposures, and the program routes each to the right part:

Quick Answer: Garagekeepers covers the customer's auto in your care; Dealers physical damage covers the dealer's own inventory; garage general liability covers premises and completed-operations claims.

The Garagekeepers Limit and Aggregation Trap

The Garagekeepers limit applies per location, per event to all customers' autos damaged at once. A hailstorm or shop fire that damages forty cars on the lot is paid only up to that single per-location limit, not multiplied by the number of cars. Dealers and large repair shops must set the limit to cover peak inventory in their care, not an average day. Setting it too low is the classic Garagekeepers underinsurance and suitability error, and a frequent exam scenario: the storm strikes when the lot is full, the limit was set for a typical day, and the insured is left with a large uninsured shortfall.

The producer's job is to match the limit to the maximum number and value of customer vehicles realistically on premises at one time.