12.4 Garage Coverage Form and Garagekeepers

Why Auto Businesses Need a Special Form

A standard BAP assumes the insured owns and drives its vehicles. An auto dealer, repair shop, service station, or parking operation has a different core exposure: it constantly handles other people's vehicles and carries a fluctuating inventory of vehicles for sale. The Garage Coverage Form (historically CA 00 05) was designed for exactly these risks, bundling auto liability, premises/operations general liability, and garagekeepers into one contract.

ISO later split the combined garage form. New-and-used auto and trailer dealers are now typically written on the Auto Dealers Coverage Form (CA 00 25), while non-dealer auto-service businesses (repair shops, service stations, parking lots) continue to use a garage-style form. On the exam, treat "garage policy" as the umbrella concept for any auto-business risk and focus on what each part insures.

The Care, Custody, or Control Gap

General liability and the garage liability section exclude damage to property in the insured's care, custody, or control (CCC). When a customer leaves a car at a repair shop, that car is in the shop's CCC — so if a mechanic's negligence damages it, ordinary liability will NOT respond. Garagekeepers coverage is the fix: it specifically insures damage to a customer's auto while it is in the insured's care for service, repair, storage, or parking. This CCC gap is the single most-tested reason garagekeepers exists.

The Three Garagekeepers Bases

Garagekeepers can be written on three different triggers, each with different cost and breadth:

Under Legal Liability, a customer whose car is damaged by hail while parked at the shop recovers nothing unless the shop was negligent. Under Direct Primary, the shop's policy pays for the hail damage regardless of fault — better customer service, higher premium.

What Garagekeepers Does and Does Not Cover

Garagekeepers responds to comprehensive (or specified causes of loss) and collision damage to customers' autos, subject to a per-location limit and a deductible. The deductible structure often differs by peril: a separate deductible may apply per customer auto for collision, with an aggregate per-event deductible for comprehensive losses (such as a hailstorm hitting a full lot).

What garagekeepers does NOT do:

• It does not cover the insured's own owned autos — those go under the garage form's physical-damage/auto sections.
• It does not provide liability for bodily injury the insured causes — that is garage (auto) liability.
• It does not cover customers' personal property left inside the vehicle.

Worked Example

A hailstorm damages 12 customer cars on a repair shop's lot. Total damage is $48,000. The shop carries Direct Primary garagekeepers with a $250 per-auto comprehensive deductible. The insurer pays $48,000 minus (12 × $250 = $3,000) = $45,000, regardless of whether the shop was negligent, because Direct Primary pays without proof of fault.

Auto Dealers and the Garage Coverage Form

Businesses in the auto trade — dealers, repair shops, service stations, parking operations — have a blended exposure that ordinary forms handle poorly: they have both business operations (like a CGL) and a constant auto exposure (customers' cars and their own inventory). The Auto Dealers / Garage Coverage Form combines auto liability, general liability (premises/operations and products), and optional physical damage on dealer inventory into one contract designed for the trade.

Garagekeepers Coverage and Legal-Liability Options

Garagekeepers coverage protects the business for damage to customers' autos left in its care, custody, or control for service, repair, or storage — an exposure the CGL excludes (care/custody/control) and the auto form does not fully address. It can be written on three bases:

A repair shop whose customer's car is stolen off the lot has coverage under direct-primary garagekeepers even without proof of negligence, whereas the legal-liability basis would require showing the shop was at fault.

Dealers Physical Damage and False Pretense

Auto dealers insure their inventory of vehicles for sale under dealers physical damage coverage, which can be written on a reporting basis (the dealer reports monthly values, premium tracks inventory) or a non-reporting basis with a blanket limit. A heavily tested add-on is False Pretense coverage: it pays the dealer when it is tricked out of a vehicle by fraud — a buyer who pays with a bad check, or someone who poses as the owner to sell a car. Ordinary theft coverage may not respond because the dealer voluntarily parted with the vehicle, so False Pretense is the specific cure for fraud-induced loss of inventory.

When Each Coverage Responds — Worked Scenario

A repair shop's customer leaves a car for brake work. Overnight a hailstorm dents it, and a second customer's car is stolen off the lot. Under legal-liability garagekeepers, the shop pays only if it was negligent — hail is an act of nature, so likely no payment unless the shop failed to garage the car as promised. Under direct-primary garagekeepers, both the hail damage and the theft are paid regardless of fault, primary to the customers' own policies.

This is exactly why service businesses that want to satisfy customers buy direct coverage rather than the narrower legal-liability basis — and why the exam pairs the three bases against a no-fault loss.