12.4 Garage Coverage Form and Garagekeepers

The Auto Dealers / Garage Coverage Form

Businesses in the auto trade — dealers, repair shops, body shops, service stations, parking operations — face a blended exposure that neither the Business Auto Form nor a standard CGL fully addresses. The Auto Dealers Coverage Form (CA 00 25) (which replaced the older Garage Coverage Form (CA 00 05) for dealers) packages three exposures into one contract:

Non-dealer repair shops and service operations typically use the Garage Coverage Form or a Business Auto Form with a Garagekeepers endorsement (CA 99 37).

Why the trade needs special treatment

A repair shop drives customer cars (road tests), parks them on the lot, and works on them. The standard BAP care-custody-control exclusion would leave damage to customers' cars uninsured, and the CGL excludes autos. The garage program stitches the gap closed.

Garagekeepers Coverage

Garagekeepers covers direct physical damage to a customer's auto while it is in the insured's care, custody, or control for service, repair, storage, or parking. It mirrors comprehensive/collision perils but applies to OTHERS' autos, not the insured's own.

Three coverage triggers (basis of liability)

Worked example: A shop parks a customer's car; a hailstorm dents it (no negligence). Under Legal Liability garagekeepers, the shop is not liable for an act of God, so the policy pays nothing. Under Direct Primary, the policy pays the damage regardless of fault. This fault-vs-no-fault distinction is the single most tested garagekeepers point.

Limits, Deductibles, and Exclusions

Garagekeepers limits are stated per location with separate comprehensive and collision deductibles that apply per customer auto, often with an annual aggregate deductible cap for a single event (e.g., a hailstorm hitting 20 cars).

Aggregate-deductible example: Deductible is $250 per auto, $5,000 maximum per event. A hailstorm damages 30 customer cars. Thirty cars times $250 = $7,500, but the per-event cap limits the insured's retention to $5,000; the insurer absorbs the extra $2,500.

Common exclusions

• Theft by the insured's employees (dishonesty) — needs a crime/bond form.
• Defective parts or faulty work itself (the cost to redo the work) — though resulting damage may be covered.
• Loss to sound-reproducing or electronic equipment not permanently installed.

Trap: Garagekeepers protects the customer's auto. The dealer's OWN inventory of autos for sale is covered as 'autos held for sale' under the dealers' physical damage section, not garagekeepers.

Auto Liability vs. General Liability Within the Form

The genius of the dealers/garage program is that it decides, claim by claim, whether a loss is an auto exposure or an operations exposure and routes it to the correct insuring agreement so there is no gap and no double recovery.

Covered-auto symbols still apply. The dealers' form uses its own symbol set (similar concept to the BAP) to designate which autos trigger liability and physical damage, including special symbols for autos held for sale and owned autos used in the dealership.

Service Stations, Parking, and Valet Risks

Garagekeepers is not limited to repair shops. Parking garages, valet operators, and storage lots take in customers' autos and bear care-custody-control exposure without ever repairing them. For these risks, the basis-of-liability choice is critical: a valet that frequently moves cars faces collision exposure, so direct primary is common, whereas a long-term storage lot with no driving may accept legal liability to save premium.

Worked premium-logic example: Two shops each store 40 cars. Shop A (valet, cars constantly moved) buys direct primary at a higher rate because the insurer pays even for the shop's non-negligent fender-benders. Shop B (locked storage, no driving) buys legal liability cheaply, accepting that an uninsured act-of-god loss falls on the customer's own auto policy. Matching the basis of liability to the operation is the underwriting and exam point.

Primary vs. Excess and the Customer's Own Policy

The basis of liability also dictates how garagekeepers coordinates with the customer's own auto policy. Under direct primary, the garage's coverage pays first, then may subrogate; under direct excess, the customer's own collision/comprehensive pays first and garagekeepers tops up only the shortfall (such as the customer's deductible). Under legal liability, the customer's own policy bears any non-negligent loss entirely. Customers generally prefer a shop carrying direct primary because their own deductible and loss history stay untouched, which is why busy dealers advertise it.