12.4 Garage Coverage Form and Garagekeepers

Why a Garage Form Exists

Businesses in the auto trade — franchised and used-car dealers, repair shops, service stations, and parking facilities — face two intertwined exposures at once: the auto liability of test drives, deliveries, and shuttling, and the premises/operations liability of running a place of business. Rather than stack a BACF and a CGL, ISO combines them.

The Garage Coverage Form packages auto liability, general (operations) liability, and the option to add Garagekeepers and physical damage for the dealer's own inventory. Note that large dealers are often written today on the Auto Dealers Coverage Form (CA 00 25), the modern successor that consolidates these exposures.

Dealer inventory raises a special physical-damage question. Autos held for sale fluctuate daily in number and value, so dealer physical damage is often written on a reporting form with a coinsurance-style provision: the dealer reports monthly values, and a deposit premium is adjusted to reported exposure. Underreporting triggers a penalty similar to coinsurance, paying only the proportion of values reported to values that should have been reported.

Garage Liability: Two Hazards

Garage liability divides the exposure into two pieces:

• Auto hazard — liability arising out of ownership, maintenance, or use of covered autos in garage operations (e.g., a mechanic crashes a customer's car on a road test).
• Operations (other than auto) hazard — premises and completed-operations liability (e.g., a customer slips in the showroom, or faulty repair work causes injury later).

Garage form covered-auto symbols differ from the BACF: Symbol 21 is any auto; other symbols address autos the dealer owns, autos held for sale, and non-owned autos. Trap: do not apply BACF symbols 1-9 to a garage risk; the garage form has its own symbol set.

Garagekeepers Coverage

Garagekeepers protects the garage against physical damage to a customer's auto left in the garage's care, custody, or control (CCC) — a parking garage, a body shop, a valet. There are three triggers, broadest to narrowest:

Trap: With Legal Liability, a fire or theft the garage did not negligently cause is NOT covered, because the garage has no legal liability. Direct Primary would still pay the customer.

Worked Garagekeepers Example

A body shop holds a customer's car valued at $30,000. A covered fire damages it; repairs cost $12,000. The Garagekeepers limit is $60,000 per location with a $500 per-auto deductible.

• Direct Primary or Direct Excess: pays regardless of fault. Settlement = $12,000 - $500 = $11,500 (Direct Excess pays only after the customer's own auto policy responds, if any).
• Legal Liability: if the shop was NOT negligent in causing the fire, it pays $0 — there is no legal liability to trigger coverage.

Exam takeaway: the only difference among the three Garagekeepers bases is the fault and primacy trigger, not the limit or deductible. Match the customer-friendliness of the basis to whether fault is required.

Direct Primary vs. Excess Garagekeepers and the Auto-Dealer Split

The Garage and Auto Dealers forms blend liability (premises/operations and auto) with coverage for customers' vehicles in the dealer's or repairer's care. Garagekeepers can be written three ways, and the exam tests the difference.

Exam trap: Legal-liability garagekeepers pays only when the garage is at fault; direct coverage pays even when the garage is not at fault. Customers prefer direct coverage because a no-fault loss (vandalism while parked) is still paid.

Garage Liability Hazards

Garage liability covers two hazards: the premises/operations hazard (a customer slips in the showroom) and the auto hazard (a mechanic test-drives a car and causes an accident). Dealers also need dealers physical damage for their own inventory. Separating the at-fault and no-fault payment logic is the most-missed garagekeepers concept.

A Worked Garagekeepers Loss and the Dealer's Own Inventory

A repair shop holds a customer's car worth $22,000. While parked on the lot, hail damages it for $6,000, and the shop was not negligent.

• Legal-liability garagekeepers: pays nothing, because the shop is not legally liable for a no-fault weather loss.
• Direct (primary) garagekeepers: pays the $6,000 (minus any deductible) regardless of fault, then may subrogate.

Exam trap: On a no-fault loss to a customer's vehicle, only direct garagekeepers pays; legal-liability garagekeepers does not. This is the single most-tested garagekeepers distinction.

The Dealer's Own Cars

Garagekeepers covers customers' vehicles, not the garage's own inventory. An auto dealer insures its showroom and lot vehicles under Dealers Physical Damage (false pretense, theft, collision, comprehensive) with reporting-form limits that track fluctuating inventory values. Mixing up customer-vehicle coverage (garagekeepers) with owned-inventory coverage (dealers physical damage) is a frequent error.