12.4 Garage Coverage Form and Garagekeepers

Who Needs Garage Coverage

Businesses in the auto trade - franchised and used-car dealers, repair shops, service stations, body shops, and parking operations - face overlapping exposures that no single standard form covers. They need auto liability, premises/operations liability, coverage for customers' vehicles in their care, and protection for their own inventory. The Garage Coverage Form (ISO CA 00 05) and, for franchised dealers, the Auto Dealers Coverage Form (CA 00 25) package these together.

Two Liability Halves

The non-auto half functions much like the Commercial General Liability (CGL) policy but is built into the garage form so the dealer carries one contract instead of two.

Garagekeepers Coverage

Garagekeepers is the signature garage coverage. It protects the business's liability for physical damage to customers' autos left in the garage's care, custody, or control (CCC) - a category the garage's own physical damage coverage would not reach because the cars are not owned.

Covered causes typically include fire, theft, explosion, vandalism, collision, and other specified perils while the customer's auto is in the garage's possession.

Three Garagekeepers Writing Bases

Worked example: A hailstorm damages 10 customer cars parked at a body shop, $40,000 total. The shop was not negligent. Under legal liability garagekeepers, the shop owes nothing and pays nothing - each customer turns to their own comprehensive. Under direct primary, the garagekeepers insurer pays the $40,000 regardless of fault. Under direct excess, the insurer pays only the portion not covered by the customers' own policies.

Dealers Physical Damage

A dealer's own inventory of vehicles for sale is covered by dealers physical damage, often written as false pickup / open lot coverage against perils such as fire, theft, and windstorm.

Common Exam Traps

• Garagekeepers vs. dealers physical damage: garagekeepers is for customers' cars; dealers physical damage is for the dealer's own stock. Students mix these constantly.
• A service station that does not sell or repair cars may not need the full garage form - eligibility hinges on being in the auto trade.
• Garagekeepers requires the car be in the garage's care, custody, or control - a car merely parked on a public street the garage does not control is not in its CCC.

Why the Care, Custody, or Control Gap Exists

The garage's own auto physical damage covers cars the garage owns. The CGL-style half excludes property in the insured's care, custody, or control. That leaves a hole: customer cars dropped off for service are neither owned by the garage nor reachable under the CGL. Garagekeepers fills exactly that gap, which is why it is mandatory for any shop that takes possession of customer vehicles.

Garagekeepers Limits and Deductibles

Garagekeepers carries a per-location limit (the most the insurer pays for all customer autos at one location in one loss) and usually separate per-auto and per-event deductibles.

Worked example: A shop carries $200,000 garagekeepers per location with a $250 per-auto / $1,000 per-event deductible. A garage fire damages eight customer cars totaling $150,000. The insurer pays $150,000 less the $1,000 per-event deductible (the per-event applies because multiple autos were hit by one event) = $149,000, capped at the $200,000 location limit.

Auto Dealers Coverage Form Highlights

The Auto Dealers Coverage Form (CA 00 25) modernized and replaced much of the old garage form for franchised dealers. It folds in:

Eligibility and Classification

Not every auto-adjacent business uses the garage form. A parking garage or valet with no sales or repair may be written on garagekeepers plus a CGL, while a full-service dealer-with-repair uses the auto dealers form. Classification turns on whether the firm is genuinely in the auto trade and whether it takes possession of customer vehicles.