12.4 Garage Coverage Form and Garagekeepers

What the Garage Coverage Form Is

The Garage Coverage Form, ISO CA 00 05, is a package form for businesses in the auto trade — franchised and used-car dealers, repair shops, service stations, parking facilities, and body shops. A single form blends three exposures that would otherwise need separate policies:

• Garage liability (auto + premises/operations)
• Garagekeepers (liability for customers' autos in the insured's care)
• Physical damage on the insured's owned autos and inventory

(Newer accounts may instead use the Auto Dealers Coverage Form, CA 00 25, the modern ISO replacement for franchised dealers, but the Garage Coverage Form remains the classic exam reference for the auto-business package.)

Garage Liability — Two Halves

Garage liability is broader than ordinary auto liability because the business has both vehicle and premises exposures:

This dual structure means a garage policy can respond whether the loss flows from driving a covered auto or from the premises/operations side of the business.

Garagekeepers Coverage — A Bailee Exposure

When a customer leaves a car for repair, storage, or parking, the dealer becomes a bailee — legally responsible for safekeeping. Garagekeepers insures the insured's liability for physical damage to CUSTOMERS' autos in the insured's care, custody, or control. This is NOT the dealer's own property; it is the customer's vehicle.

Garagekeepers is written on three coverage bases, and choosing among them is heavily tested:

Worked example: A hailstorm dents 12 customer cars on a repair lot. Under Legal Liability garagekeepers, the insurer pays nothing — the dealer was not negligent (hail is no one's fault). Under Direct Primary or Direct Excess, the insurer pays for the hail damage regardless of fault; Direct Excess would pay only after the customers' own comprehensive coverage responds.

Garage Physical Damage — the Dealer's Own Cars

Separate from garagekeepers, the form's physical damage insures the dealer's owned autos, including autos held for sale (inventory). Dealers often rate inventory on a reporting basis, periodically reporting the average value on the lot so the premium tracks fluctuating stock. The key distinction:

• Garage physical damage = the insured's OWN cars and inventory.
• Garagekeepers = CUSTOMERS' cars in the insured's care.

Key Exclusions and Traps

Choosing a Garagekeepers Basis — Worked Comparison

The three bases differ in WHEN they pay and HOW they coordinate with the customer's own insurance. Consider a $9,000 fire loss to a customer's car stored overnight on the lot, where the fire was caused by faulty wiring in the shop (the shop IS negligent) and the customer carries their own comprehensive coverage with a $500 deductible:

Now change the facts so the fire was caused by lightning (no negligence): Legal Liability pays nothing, while Direct Primary and Direct Excess both respond regardless of fault. This is why a quality-conscious dealer prefers a direct basis — it protects customer goodwill even when the shop is blameless.

Garagekeepers Limits, Deductibles, and Sub-Limits

Garagekeepers is written with a per-location limit reflecting the maximum value of customers' autos on the premises at any one time, plus a per-auto deductible (and sometimes a separate, higher deductible for theft or for fire and explosion). A dealer must set the limit to the peak lot exposure — a hailstorm or fire can damage every car at once, so the per-location limit, not the per-auto value, drives the recovery in a catastrophe.

Comparing the Three Auto-Business Coverage Concepts

Keeping these three straight — third-party liability, the dealer's own cars, and customers' cars — resolves the majority of garage-form questions, because exam writers routinely describe a loss and ask which of the three responds.