12.4 Garage Coverage Form and Garagekeepers

Auto Dealers and the Garage Exposure

Businesses in the auto trade — franchised and independent dealers, service stations, repair shops, body shops, and parking operations — have hybrid exposures the BAP alone cannot address. They need auto liability, general liability for premises and operations, and coverage for customers' autos left in their care.

ISO consolidates most of these into the Auto Dealers Coverage Form (CA 00 25), which replaced the older standalone Garage Coverage Form for franchised and independent dealers. Non-dealer auto businesses such as repair shops and service stations may still use the Garage Coverage Form (CA 00 05) or a combination of the BAP plus Garagekeepers coverage.

Components of Garage / Auto Dealers Coverage

The form bundles several coverages into one policy:

• Covered Autos Liability — like the BAP, using covered auto symbols (dealers use special symbols such as 21 for any auto and 31 for owned autos).
• Garage Operations (Other Than Covered Autos) — premises/operations and products-completed-operations liability, functioning like CGL.
• Physical Damage on the dealer's own autos, often on a reporting basis reflecting fluctuating inventory.
• Garagekeepers Coverage for customers' autos.

The dual liability structure (auto liability plus garage operations liability) is a favorite exam point. An auto-related injury triggers covered autos liability; a slip-and-fall in the showroom triggers garage operations liability. Keep the two mental buckets separate when reading scenario questions.

Garagekeepers Coverage

Garagekeepers insures the business's liability for damage to a customer's auto left in the insured's care, custody, or control for service, repair, storage, or parking. It is the bailee coverage of the auto trade and exists precisely because the CGL care-custody-control exclusion would otherwise leave a gap.

Three coverage options exist:

1. Legal Liability — pays only if the insured is legally liable (negligent) for the customer auto's damage.
2. Direct Primary — pays for covered damage regardless of fault, primary to the customer's own insurance.
3. Direct Excess — pays regardless of fault, but excess over the customer's collectible insurance.

Garagekeepers covers comprehensive (or specified causes of loss) and collision perils on the customer auto, each subject to a deductible.

Deductible Mechanics

Garagekeepers deductibles often appear as a per-auto deductible plus a maximum per-event (aggregate) deductible. A typical setup: $100 per customer auto for comprehensive, $250 per auto for collision, with a $1,000 maximum per event applied across all damaged autos in one occurrence.

Worked example: a fire (comprehensive peril) damages 8 customer autos for $4,000 each ($32,000 total) under Direct Primary with a $100 per-auto / $1,000 maximum deductible. Per-auto deductibles total 8 x $100 = $800, below the $1,000 cap, so $800 applies. The insurer pays $32,000 - $800 = $31,200, subject to the Garagekeepers limit of insurance.

Exam Traps

• Legal Liability vs. Direct: if a customer's car is stolen and the shop was not negligent, Legal Liability garagekeepers pays nothing, while Direct Primary/Excess pays. Tested often.
• Garagekeepers covers customers' autos, not the dealer's own inventory (that is dealer physical damage).
• Direct Excess pays only after the customer's own collision/comprehensive insurance is exhausted.

The Garage Coverage Form Structure

The Garage Coverage Form is a single form built for auto-related businesses (dealers, repair shops, service stations, body shops) because those risks face overlapping auto and premises liability that the BAP and CGL split awkwardly. It bundles three pieces: garage liability (auto and general/premises-operations liability arising from garage operations), garagekeepers (liability for customers' autos in the insured's care), and auto physical damage for the dealer's own owned/inventory autos. A non-dealer (repair shop) uses a closely related Garage Coverage Form without the dealer inventory features.

Garage liability is the heart of the form and uses the covered-auto symbols just like the BAP, but it also folds in products and completed-operations and premises liability, with the key distinction between the "all customers other than the named insured" wording for auto exposures. It carries an each-accident limit for liability and applies an aggregate to general-liability-type claims (products/completed operations and other than auto). A defining trap is that bodily injury to the garage's employees is excluded (workers compensation territory), and damage to autos the dealer owns is physical damage, not liability.

Garagekeepers offers the three writing bases the exam contrasts: Legal Liability (pays only if the garage is legally liable, i.e., negligent), Direct Primary (pays for damage to a customer's auto regardless of the garage's fault, as primary coverage), and Direct Excess (pays without regard to fault but only after the customer's own auto insurance is exhausted). The covered perils are typically comprehensive, specified causes of loss, collision, and theft on customers' autos left for service, sale, or storage.

Worked scenario: a customer's $40,000 car is destroyed by a shop fire with no negligence by the shop. Under Legal Liability garagekeepers the shop owes nothing, so the form pays nothing. Under Direct Primary it pays the $40,000 (less deductible) regardless of fault. Under Direct Excess it pays only the portion the customer's own comprehensive coverage does not. Matching the writing basis to the payout is the signature garage question.

Key Takeaways

The Garage Coverage Form combines garage liability (auto plus premises/products), garagekeepers (customers' autos in the insured's care), and dealer auto physical damage in one form. Garagekeepers is written as Legal Liability (negligence required), Direct Primary (pays regardless of fault), or Direct Excess (pays without fault but after the customer's own insurance). Employee injury (workers comp) and the dealer's own autos (physical damage) are outside garagekeepers.