12.4 Garage Coverage Form and Garagekeepers

The Garage Exposure

Businesses such as franchised and used-car dealers, repair shops, service stations, body shops, and parking operations face two simultaneous exposures: an auto exposure (driving customers' and dealer-owned vehicles) and a premises/operations and products-completed-operations exposure (a customer slips on the lot, or a faulty repair causes a later accident). Rather than buying separate Business Auto and CGL policies, these risks use a combined form — historically the Garage Coverage Form, and for dealers now the Auto Dealers Coverage Form (ISO CA 00 25).

The combined form provides, in one place:

• Covered Autos Liability for the garage's operations.
• Garage Operations – Other Than Covered Autos (the general-liability piece for premises and products/completed operations).
• Physical Damage on owned autos and dealer inventory.
• Garagekeepers coverage for customers' autos.

Dealer Symbols and Inventory

Auto dealers use special covered-auto symbols. For example, Symbol 31 designates owned autos including the dealer's inventory of vehicles held for sale, whose value fluctuates daily. Physical damage on inventory is typically written on a reporting or blanket basis with provisions for the rise and fall of the lot's value, and a per-loss deductible plus a maximum per occurrence.

Garagekeepers: Filling the Care, Custody, Control Gap

When a customer leaves a car for repair, valet, or storage, that vehicle is in the garage's care, custody, or control (CCC) — and the standard liability form excludes damage to property in the insured's CCC. Garagekeepers coverage is the solution: it covers the garage's liability for direct physical damage to a customer's auto in its possession.

Garagekeepers is offered on three distinct bases, a heavily tested distinction:

Worked Scenario

A customer's $35,000 car is stolen off a repair shop's lot. The shop locked the gate and was not negligent. The Garagekeepers deductible is $500.

• Legal Liability basis: The shop was not negligent, so there is no payment — the customer turns to their own comprehensive coverage.
• Direct Primary basis: Pays the loss regardless of fault: $35,000 − $500 = $34,500, ahead of the customer's policy.
• Direct Excess basis: Pays regardless of fault, but only after the customer's own comprehensive pays; the garage form covers what the customer's policy does not, less the deductible.

Exam trap: Direct Primary and Direct Excess both pay without proving negligence; they differ only in whether the garage's or the customer's coverage pays first. Legal Liability requires fault and is the cheapest option.

Garage Operations - Other Than Covered Autos

The non-auto half of the form behaves like a CGL. It covers premises liability (a customer trips in the showroom), products and completed operations (a brake job fails weeks later and causes an accident), and operations away from the premises. It carries its own aggregate limit. A key distinction: bodily injury and property damage arising out of garage operations involving the ownership, maintenance, or use of covered autos fall under the auto side, while everything else falls under this section. Allocating a loss to the correct side affects which limit and which deductible apply.

Selecting Garagekeepers Perils

Garagekeepers can be written for comprehensive (or specified causes of loss) and collision perils, mirroring physical damage. A parking garage with no road exposure might buy only fire, theft, explosion, and mischief, while a repair shop that road-tests vehicles needs collision too. The deductible can apply per auto or per event/location, and on the Direct bases a separate per-loss and per-location maximum may cap a catastrophe such as a hailstorm striking dozens of stored cars at once.

Worked Scenario - Per-Location Cap

A hailstorm damages 40 customer cars at a dealership written Direct Primary with a $250 per-auto deductible and a $250,000 per-location maximum. Average damage is $8,000 per car, so gross loss is 40 x $8,000 = $320,000; after 40 x $250 deductibles ($10,000), the net is $310,000. Because the per-location maximum caps recovery at $250,000, the dealer absorbs the $60,000 excess. This illustrates why high-inventory garages must set the per-location limit to a realistic catastrophe value, not a single-vehicle value.

Garagekeepers Coverage: Three Coverage Options

The Garage Coverage Form (and the newer Auto Dealers form) covers auto-business risks. Garagekeepers specifically covers a business's liability for damage to customers' autos left in its care (repair shop, parking garage, valet). It offers three options that determine when the insurer pays:

Garagekeepers differs from garage liability (BI/PD the business causes to third parties) and from the customers' own auto physical damage. Trap: under the legal liability option the garage pays only if it was negligent; under direct coverage it pays for covered-peril damage to the customer's car even without negligence (primary or excess to the customer's policy).