12.4 Garage Coverage Form and Garagekeepers

The Garage Coverage Form (CA 00 05)

The Garage Coverage Form (CA 00 05) is a package form designed for businesses in the automobile trade - franchised and independent auto, truck, and motorcycle dealers, plus repair shops, service stations, body shops, and parking operations. It blends auto and general liability into one form because these risks have both: they own and operate autos AND they have premises/operations exposures (a customer slipping in the showroom).

The Garage form provides:

• Garage liability (combined auto and general/premises-operations liability for the garage business)
• Garagekeepers coverage (for customers' autos in the insured's care)
• Physical damage on the dealer's own autos (often on a reporting/blanket basis for inventory)

Note: ISO also issues the Auto Dealers Coverage Form (CA 00 25), which modernized and largely replaced the Garage form for franchised dealers, but the exam still tests the Garage form heavily.

Garage liability vs. general liability components

Garage liability covers BI and PD arising from garage operations, which includes both:

• Auto exposures - the dealer's covered autos, test drives, customer test drives, demos.
• Other than auto (premises/operations) exposures - the showroom, lot, service bays. This part works like a CGL for the garage business.

A distinctive feature is the "garage operations - other than covered autos" aggregate limit (a products/completed-operations style aggregate) running alongside an "each accident" auto limit. So the form blends per-accident auto limits with aggregate general-liability limits.

Garagekeepers Coverage

Garagekeepers coverage insures the garage's liability for damage to a customer's auto left in the insured's care, custody, or control for service, repair, storage, or parking. Remember: under a standard liability policy, the care, custody, or control (CCC) exclusion would bar coverage for damage to customers' cars - garagekeepers is what fills that gap.

Garagekeepers can be written on three bases:

• Legal liability - pays only when the garage is legally liable (negligent) for the damage. Cheapest.
• Direct primary - pays for covered damage to the customer's auto regardless of the garage's fault, and is primary over the customer's own insurance.
• Direct excess - pays regardless of fault but is excess over any other collectible insurance (such as the customer's own auto policy).

Garagekeepers covers the perils of comprehensive (or specified causes of loss) and collision, subject to a deductible. The customer's vehicle is the covered property, not the garage's own inventory.

Worked example - direct excess vs. direct primary

A customer leaves a $40,000 car for service. A hailstorm (a comprehensive peril) damages it: $12,000 in damage. The customer also has their own comprehensive coverage with a $1,000 deductible. Garagekeepers deductible is $250.

• Direct primary basis: The garage's policy pays first regardless of fault. Pays $12,000 - $250 = $11,750, then may subrogate. The customer's policy is untouched.
• Direct excess basis: The customer's own auto policy is primary. It pays $12,000 - $1,000 = $11,000. Garagekeepers pays only the excess - here the $1,000 deductible gap the customer's policy did not pay, subject to the garagekeepers $250 deductible, so up to $750.
• Legal liability basis: Hail is no one's fault, so the garage is not legally liable - garagekeepers pays $0. The customer relies on their own policy.

When Each Garagekeepers Basis Pays

The three garagekeepers bases differ by when they respond. Legal liability pays only when the garage is negligent, so a no-fault peril such as hail pays nothing and the customer falls back on their own policy. Direct primary pays for covered damage to the customer's auto regardless of fault and ahead of the customer's insurance. Direct excess pays regardless of fault but sits behind the customer's own coverage, typically funding only the customer's deductible gap. When a stem mentions whether the garage was at fault and whether the customer has their own coverage, those two facts select the basis that responds.

Why the Garage Form Blends Two Lines

Auto-trade businesses face both auto exposures (test drives, demos, lot operations) and premises-operations exposures (a customer slipping in the showroom), so the Garage Coverage Form merges auto liability with CGL-style coverage and adds garagekeepers to override the care-custody-or-control exclusion for customers' cars. The newer Auto Dealers Coverage Form (CA 00 25) modernized this for franchised dealers, but the exam still tests the Garage form's blended limit structure - an each-accident auto limit alongside an aggregate for garage operations other than covered autos.

Worked Garagekeepers Comparison Recap

Use a single fact pattern to lock in the three bases. A customer's $40,000 car suffers $12,000 of hail damage; the customer carries comprehensive with a $1,000 deductible and the garagekeepers deductible is $250. On a direct primary basis the garage pays first regardless of fault, $12,000 minus $250 = $11,750. On a direct excess basis the customer's policy pays $11,000 first and garagekeepers fills only the deductible gap, up to $750. On a legal liability basis hail is no one's fault, so the garage owes nothing and the customer relies on their own policy. Matching fault and the customer's coverage to the basis is the whole skill.

Care, Custody, or Control Override

Garagekeepers exists because a standard liability policy's care-custody-or-control exclusion would bar coverage for damage to customers' cars in the shop. The garagekeepers grant overrides that exclusion for the specific exposure of customer vehicles left for service, storage, or parking, covering them on comprehensive (or specified causes) and collision perils subject to a deductible.