12.4 Garage Coverage Form and Garagekeepers

The Auto Dealers / Garage Coverage Form

Businesses in the auto trade — franchised and independent dealers, repair shops, service stations, parking facilities, and body shops — have hybrid exposures: they operate autos AND they have customers' autos in their care. ISO consolidated these into the Auto Dealers Coverage Form (CA 00 25), the modern successor to the older Garage Coverage Form (CA 00 05). The exam still uses the term garage coverage.

The form combines auto liability, general liability (premises and products/completed operations for non-auto exposures), garagekeepers coverage, and physical damage on the dealer's own autos in one contract.

Why bundle them? An auto dealer faces a slip-and-fall on the lot (premises GL), a faulty repair that causes an accident later (products/completed operations), a test-drive crash (auto liability), and fire damage to a customer's car in for service (garagekeepers) — four different triggers a normal BAP or CGL alone would not coordinate. The Auto Dealers form was filed in 2007 to consolidate the old Garage form's dealer and non-dealer halves; non-dealers such as service stations and parking lots may instead use stand-alone garagekeepers and BAP coverages.

Garage Liability vs. Garagekeepers

These two are constantly confused on the exam:

• Garage liability is third-party coverage — it pays for BI/PD the business causes to others (e.g., a test-drive accident or a customer slipping on the lot).
• Garagekeepers is coverage for damage to customers' autos left in the insured's care, custody, or control for service, repair, storage, or parking. It is a bailee coverage.

Trap: Damage to a customer's car while in the shop is NOT garage liability — care, custody, and control is excluded under liability. It is garagekeepers.

The reverse trap also appears: damage the business causes to a customer's car it does not hold (for example, backing a tow truck into a car parked across the street that was never left for service) is garage liability, because there is no bailment. The dividing line is always possession under a bailment. Garagekeepers responds only for covered causes of loss — comprehensive/specified causes and collision — so wear, mechanical breakdown, and theft of a customer's personal property left in the car are not garagekeepers losses.

Garagekeepers Coverage Options

Garagekeepers can be written on three bases, which set when it responds:

Garagekeepers covers comprehensive/specified causes of loss and collision on customers' autos, each subject to a per-auto deductible and a per-location limit.

Choosing among the three is a cost-versus-protection decision. A high-volume dealer who wants customer goodwill buys Direct Primary so a customer never has to file on their own policy and never sees a fault dispute. A budget shop confident in its security buys Legal Liability and pays only when actually negligent — so a flood or a neighbor's fire may not be covered. Direct Excess is the compromise: it pays regardless of fault but sits behind the customer's own collision/comprehensive coverage, lowering the dealer's premium while still protecting uninsured customers.

Worked Garagekeepers Example

A repair shop carries Direct Primary garagekeepers with a $100,000 per-location limit and a $500 per-auto deductible. A fire damages three customer vehicles: $40,000, $35,000, and $50,000 (total $125,000).

• Each auto carries its own $500 deductible: net losses $39,500 + $34,500 + $49,500 = $123,500.
• The $100,000 per-location limit caps the total payout at $100,000.

Because it is Direct Primary, the shop's policy pays first regardless of whether the shop was negligent; the customers do not have to tap their own collision/comprehensive coverage.

Garagekeepers' Three Coverage Bases

The Garage/Auto Dealers program splits liability into Garage Liability (the dealer's own operations and autos, including premises and product/completed-operations) and Garagekeepers, which covers the dealer's legal liability for customers' autos left in its care, custody, or control for service, repair, or storage. Garagekeepers is written on one of three bases the exam contrasts:

Legal liability pays only when the garage is legally responsible (negligent) for damage to the customer's car. Direct primary pays for damage to the customer's auto regardless of fault, and pays before the customer's own coverage. Direct excess also pays regardless of fault but only after the customer's own collision/comprehensive is exhausted. A worked scenario: a hailstorm damages customer cars on the lot with no negligence by the garage — under legal liability the garage pays nothing (no fault), but under direct coverage the policy responds.

Knowing that only the direct bases pay absent negligence is the distinguishing point.

Garage Liability Exclusions and the Insured-Auto Trap

Garage Liability covers the dealer's premises-and-operations and owned autos but excludes damage to the customer's auto in the dealer's care — that exposure belongs to Garagekeepers. It also excludes coverage for autos held for sale by anyone other than the named insured and contains the usual pollution, war, and expected/intended exclusions. A frequent trap: a test-drive accident in a dealership vehicle is Garage Liability (the dealer's auto causing third-party harm), while hail damage to that same inventory on the lot is a physical-damage/Garagekeepers-style question, not a liability one.

Sorting third-party liability from damage to cars in the dealer's custody is the core distinction.