12.4 Garage Coverage Form and Garagekeepers

What the Garage Coverage Form Covers

The Garage Coverage Form (ISO CA 00 05) insures businesses whose core operation is autos — franchised and used-car dealers, repair shops, service stations, and parking operations. It bundles into one form coverages that would otherwise require both a BAP and a Commercial General Liability (CGL) policy:

• Garage Liability — auto-related (auto hazard) and premises/operations (general operations).
• Garagekeepers — damage to customers' autos in the insured's care, custody, or control.
• Physical Damage for the insured's own autos and dealer inventory.

Unlike the BACF, the Garage form covers products and completed operations for the dealership's auto-related work, and it covers business operations liability on the premises. Dealers use special symbols 21–31 instead of the BACF's 1–19.

Garagekeepers Coverage — Three Options

Garagekeepers addresses the gap that the insured does not own the customer's car but is responsible for it while it sits in the shop. It is written on one of three bases:

Covered perils mirror auto physical damage: fire/explosion, theft, riot, vandalism, and collision/upset. A deductible usually applies per customer auto on the direct-coverage options.

Exam trap: "Legal Liability" pays only if the garage was negligent — a hailstorm damaging cars on the lot with no negligence is not covered under Legal Liability but is under Direct Primary or Direct Excess.

Garagekeepers Worked Examples

Scenario 1 — Negligence: A mechanic leaves a customer's car unlocked and it is stolen. Under Legal Liability the garage is negligent, so coverage responds (less deductible). Under all three forms the loss is covered because liability exists.

Scenario 2 — No negligence (hail): Hail dents 12 customer cars on the lot. Legal Liability pays nothing (the garage was not at fault). Direct Primary pays each loss minus the per-auto deductible. Direct Excess pays only the amount exceeding what the customers' own policies pay.

Numeric illustration

A customer's $9,000 hail loss, garagekeepers deductible $500, customer's own auto policy ACV coverage with $250 deductible:

• Direct Primary: garage pays $9,000 − $500 = $8,500 (primary).
• Direct Excess: customer's insurer pays $9,000 − $250 = $8,750 first; garagekeepers pays only the $250 shortfall (subject to its deductible), so often $0 net.
• Legal Liability: $0 — no negligence.

Garage Liability Limits and the Auto Hazard Split

Garage liability is split between the "auto" hazard (BI/PD from ownership, maintenance, or use of covered autos and operations necessary to the auto business) and "other than auto" general operations (premises, products, completed operations). Each is subject to the liability limit on the declarations. A frequent exam point: a customer slipping in the waiting room is an other-than-auto (general operations) loss, while a test-drive collision is an auto hazard loss — both can be covered, but they engage different parts of the form.

Aggregate limits and dealers

Like CGL, the garage general operations liability carries an aggregate limit for the policy period, whereas the auto hazard is on a per-accident basis without aggregate. Dealers' inventory (autos held for sale) is insured for physical damage under the dealers' physical damage section, often with a reporting form and a per-location maximum plus an overall policy limit.

Exam trap: Garagekeepers is for customers' autos in your custody — not for the dealer's own inventory, which is covered under dealers' physical damage. Candidates wrongly apply garagekeepers to lot inventory; garagekeepers responds only to autos owned by others left in the insured's care.

Dealers' Open Lot and the Symbol 21-31 Set

Auto dealers insure their inventory (autos held for sale) under dealers' physical damage / open-lot coverage, not garagekeepers. Open-lot coverage can be written for specified perils or comprehensive, often with a per-disaster maximum and a deductible that may apply per vehicle for theft and a flat amount for hail. Dealers use the Garage form's special symbols 21 through 31 rather than the BACF's 1-19.

Trap: Garagekeepers responds only to autos owned by others left in the insured's custody - it never covers the dealer's own lot inventory, which needs open-lot/dealers' physical damage coverage.

The Auto Hazard vs. General Operations Split in Practice

Garage liability separates the "auto" hazard (BI/PD from ownership, maintenance, or use of covered autos and necessary operations) from "other than auto" general operations (premises, products, completed operations). Each engages a different part of the form, and general operations carries an aggregate while the auto hazard is per-accident without aggregate.

Trap: Garagekeepers covers customers' autos in the insured's care; the dealer's own lot inventory is covered under dealers' physical damage (open lot), not garagekeepers. Routing lot inventory to garagekeepers is the recurring dealer-coverage error.