12.4 Garage Coverage Form and Garagekeepers

The Garage exposure

Auto dealers, repair shops, service stations, parking facilities, and storage garages have a blended exposure: they own and use autos (auto exposure) and they run a premises/operations business (general liability exposure) and they take temporary custody of customers' autos (bailee exposure). ISO addresses these with two forms:

• Auto Dealers Coverage Form (CA 00 25) — the modern form for franchised and independent dealers, combining auto liability, general liability, and dealer-specific coverages.
• Garage Coverage Form (CA 00 05) — used for non-dealer garage operations such as repair shops and service stations.

The Garage/Auto Dealers form is unusual because it merges auto liability and general liability (premises and operations, products, completed operations) into one form, using covered-auto symbols for the auto portion only.

Garagekeepers Coverage

Garagekeepers coverage protects the garage's legal liability for damage to customers' autos left in its care, custody, or control for service, repair, storage, or parking. It is a bailee coverage — the garage is the bailee, the customer the bailor. Three coverage triggers can be selected:

Covered causes of loss mirror auto physical damage: comprehensive (or specified causes of loss), collision, fire, theft, explosion, and riot/vandalism, subject to the chosen deductible.

Worked example: direct excess vs. legal liability

A customer's car (ACV $30,000) is destroyed by fire in the shop. The garage was not negligent.

• On a legal liability basis: the garage owes nothing because it was not at fault, so garagekeepers pays $0 — the customer must look to their own comprehensive coverage.
• On a direct primary basis: the garagekeepers policy pays the loss (less deductible) regardless of fault, e.g., $30,000 - $250 deductible = $29,750.
• On a direct excess basis: if the customer has comprehensive that pays $30,000, garagekeepers pays only what remains above that — here $0, but it would respond if the customer were uninsured.

Trap: the garage's own physical damage on dealer inventory (autos held for sale) is covered under a separate dealer's physical damage / false-pretense section, not under garagekeepers, which is strictly for customers' autos.

Garage Coverage and Garagekeepers

Auto dealers, repair shops, service stations, and parking operations need specialized forms because they have both premises/operations liability and auto exposures plus customers' vehicles in their care.

Garagekeepers is written on three bases the exam tests:

1. Legal liability - pays only when the garage is legally liable for the customer-car damage.
2. Direct primary - pays for damage to the customer's car regardless of fault, primary over the customer's own coverage.
3. Direct excess - pays regardless of fault but excess over the customer's own insurance.

Exam trap: Garagekeepers covers CUSTOMERS' autos in the insured's care; the dealer's own vehicle inventory is insured under Dealers Physical Damage / open-lot coverage - do not confuse the two. The direct primary option pays for customer-car damage without proving the garage was at fault, which is why customers prefer it; legal liability is cheapest but pays only on proven negligence of the garage.

Auto Dealers Form and Choosing a Garagekeepers Basis

ISO replaced much of the old Garage form for dealers with the Auto Dealers Coverage Form (CA 00 25), which bundles dealers' liability (auto and general/products), garagekeepers, and dealers' physical damage. Non-dealer service risks (repair shops, parking, service stations) still use the Garage Coverage Form.

Choosing a garagekeepers basis is a service-quality and price decision:

Exam tip: A repair shop that wants to keep customers happy chooses direct primary garagekeepers, paying for damage to a customer's car after a fire or theft on the lot even when the shop was not negligent, without forcing the customer to claim on their own policy. The shop's own inventory and shop equipment is not garagekeepers - that is dealers physical damage / open-lot coverage. Garage operations liability also blends premises and products exposures unique to auto businesses.

A Garagekeepers Settlement Example

A customer leaves a $40,000 car at a repair shop. Overnight a fire (not the shop's fault) damages it $12,000.

Exam tip: This single fact pattern - a no-fault fire to a customer's car in the shop's care - cleanly separates the three garagekeepers bases. Legal liability pays nothing because negligence is unproven; direct primary pays the customer first; direct excess sits behind the customer's policy. Shops choose direct primary for customer goodwill despite higher premium. The shop's own tools, equipment, and vehicle inventory are never garagekeepers losses - they are insured under commercial property or dealers physical damage.