12.4 Garage Coverage Form and Garagekeepers
Key Takeaways
- The garage/Auto Dealers Coverage Form (CA 00 25) blends auto liability, premises liability, and garagekeepers for auto-trade businesses.
- It closes the gap between a separate BAP and CGL by combining auto and non-auto exposures.
- Garagekeepers is bailee coverage for customers' vehicles in the garage's care, custody, or control.
- Garagekeepers comes in legal liability, direct primary, and direct excess forms.
- Direct primary pays regardless of fault and primary over the customer's policy; legal liability pays only if the garage is negligent.
The Garage / Auto Dealers Coverage
Businesses in the auto trade — dealers, repair shops, service stations, parking operations — need coverage the standard BAP cannot supply. ISO historically used the Garage Coverage Form and now offers the Auto Dealers Coverage Form (CA 00 25) for franchised and used-car dealers, while non-dealer auto service risks often use the BAP plus endorsements.
The garage program is distinctive because it merges auto liability, general (premises/operations) liability, and a special garagekeepers coverage in one package.
Why the garage form exists
A dealership faces two liability streams at once: auto exposures (test drives, demos, lot vehicles) and non-auto exposures (a customer slipping in the showroom). The garage/dealers form blends both, eliminating coverage gaps that would arise from buying a BAP and a separate Commercial General Liability (CGL) policy.
The form also addresses dealers' own inventory — the vehicles held for sale — under physical-damage coverage, sometimes via a reporting form that adjusts premium to fluctuating inventory values.
Garagekeepers Coverage
Garagekeepers coverage is a bailee coverage: it protects the garage's legal liability for physical damage to customers' vehicles left in its care, custody, or control. This fills the CGL gap created by the care, custody, or control exclusion, which removes coverage for property of others in the insured's control.
Garagekeepers is written on one of three bases:
| Basis | What it pays for |
|---|---|
| Legal liability | Only when the garage is legally at fault for the damage |
| Direct primary | Pays regardless of fault, primary over the customer's own policy |
| Direct excess | Pays regardless of fault, but excess over the customer's coverage |
Garagekeepers worked example
A repair shop carries direct excess garagekeepers with a $50,000 limit and a $250 deductible. Hail damages a customer's car (ACV $20,000) parked on the lot. The customer's personal comprehensive (with a $500 deductible) pays first: $20,000 − $500 = $19,500. Garagekeepers, being excess, then responds for the customer's uninsured $500 gap, minus its own deductible logic — illustrating why direct primary is more customer-friendly than direct excess or pure legal liability, which would pay nothing absent shop fault.
Dealers' physical damage and the false-pretense peril
For a dealer, the inventory of vehicles held for sale is insured under physical damage on the Auto Dealers form, often through a reporting form that adjusts premium to monthly inventory values - underreporting triggers a coinsurance-style penalty at loss. Dealers can also add the false pretense coverage, which responds when the dealer is tricked into voluntarily parting with a vehicle by fraud, trick, or a worthless check - a loss the basic theft peril (which contemplates stealing without the owner's consent) does not cover.
Distinguishing theft (taken without consent) from false pretense (given up due to fraud) is a recurring exam item.
Garagekeepers basis - choosing among the three
| Basis | Pays when | Order of payment |
|---|---|---|
| Legal liability | Garage is legally at fault | Only source if customer has no coverage and no shop fault = nothing |
| Direct primary | Regardless of fault | Pays first, before customer's own policy |
| Direct excess | Regardless of fault | Pays after the customer's own coverage |
A customer-focused shop chooses direct primary so a damaged vehicle is made whole without the customer first tendering a claim to their own insurer (and absorbing their own deductible). The trade-off is cost: legal-liability garagekeepers is cheapest because it pays only when the shop's negligence caused the damage, leaving the customer to chase their own policy for no-fault events like hail or a falling tree. Producers should match the basis to the dealer's service philosophy and the value of inventory and customer vehicles routinely on the lot.
How the garage/dealers form blends auto and general liability
The distinctive feature of the dealers/garage program is that one form responds to both auto and non-auto liability arising from the auto business. Auto exposures include test drives, lot movement, and customer demos; general-liability exposures include a customer slipping in the showroom or a falling sign. Without the combined form, a dealer would have to coordinate a Business Auto Policy and a separate CGL, risking a gap where each policy points to the other. The dealers form also adds products and completed operations for repair work and personal & advertising injury akin to the CGL Coverage B.
A common exam point: an injury from a defective repair discovered after the customer leaves is a completed-operations loss under the garage/dealers liability section, not a physical-damage claim.
Who is an insured and the employee-vehicle trap
Under the garage/dealers form, the named insured, its officers/partners/members, and employees are insureds while using a covered auto in the business - but a frequent trap is that the form limits coverage for a customer driving a covered auto (for example on a test drive) to the difference between the customer's own insurance and the required minimum, unless higher coverage is endorsed. Likewise, employees using their own vehicles in the business create a non-owned exposure that may need to be addressed.
Producers should confirm test-drive and employee-vehicle coverage explicitly rather than assume the blended form picks up every driver at full limits.
Exam Tip: Garagekeepers is bailee coverage filling the CGL care/custody/control gap; choose direct primary for customer goodwill, and remember false pretense (parting with a car by fraud) is distinct from theft (taken without consent).
A windstorm damages several customer cars on a dealer's lot. The dealer was not negligent. Which garagekeepers basis would still pay for the damage?