12.4 Garage Coverage Form and Garagekeepers

The Auto Dealers / Garage Exposure

Businesses in the auto trade — dealers, repair shops, service stations, parking lots, and storage garages — have hybrid exposures: they own and use autos (like any business), they hold customers' autos in their care, and dealers face products and operations liability. ISO consolidated dealer coverage into the Auto Dealers Coverage Form (CA 00 25), while non-dealer garage risks use the Garage Coverage Form (CA 00 05). The exam still refers broadly to "garage" coverage, so know both.

What the Garage/Auto Dealers Form Bundles

Unlike the BACF, the garage form packages several coverages into one form:

• Garage Liability — combines auto liability AND general/premises-operations liability (including products-completed operations for dealers) into a single form.
• Physical damage on the dealer's own autos and inventory.
• Garagekeepers Coverage — for customers' autos in the insured's care, custody, or control.

Trap: Garage Liability covers the insured's liability TO OTHERS, but liability damage to a customer's auto in the insured's care is excluded under garage liability — that exposure is precisely what Garagekeepers picks up.

Garagekeepers Coverage

Garagekeepers covers physical damage to a customer's auto left in the insured's care, custody, or control, on the basis selected on the Declarations. There are three coverage triggers:

Trap: Under Legal Liability, a hailstorm that damages stored customer cars is NOT covered because the garage was not negligent. Under Direct (primary or excess), it IS covered.

Garagekeepers — Worked Numeric

A repair shop carries Direct Excess Garagekeepers with a $100,000 limit and a $250 per-auto comprehensive deductible. A customer's car (ACV $30,000) is stolen from the lot. The customer's own auto policy has $25,000 collision/comprehensive coverage.

• Direct Excess pays above the customer's collectible insurance: $30,000 ACV − $25,000 (customer's policy) = $5,000, then minus the $250 deductible = $4,750.
• Had the shop instead carried Direct Primary, the shop's policy would pay first: $30,000 − $250 deductible = $29,750, with the customer's insurer off the hook.

Garage Liability vs. Garagekeepers — Quick Contrast

• Garage Liability = the shop's liability for bodily injury/property damage to third parties and (for dealers) products/completed operations. Customer-auto damage is excluded.
• Garagekeepers = physical damage to customers' autos in the shop's custody.

Dealers also need Dealers' Physical Damage for their own inventory; perils include comprehensive, collision, and specified causes, often with reporting forms tied to fluctuating inventory values. Trap: A test-drive crash by an employee is garage liability (to the other driver) but the dealer's own demo car is dealers' physical damage, not garagekeepers.

Garage Liability vs. Garagekeepers — The Core Split

Garage liability covers the dealer/repair shop's liability to third parties for bodily injury and property damage arising out of garage operations and owned autos. Garagekeepers is a bailee coverage: it pays for damage to customers' autos left in the insured's care, custody, or control for service, storage, or parking — an exposure the CGL's care-custody-control exclusion would otherwise bar.

Garagekeepers Coverage Triggers

Garagekeepers can be written on three bases, which the exam tests:

Worked Numeric

A customer's $40,000 car is damaged by fire while in the shop for repairs; the shop is not negligent. Under legal liability garagekeepers, the insurer pays $0 (no negligence). Under direct (primary) garagekeepers with a $1,000 deductible, the insurer pays $39,000 regardless of fault. The coverage basis chosen — not the facts of fault — drives the answer, which is exactly the discrimination the exam rewards. Auto dealers now use the Auto Dealers Coverage Form, which bundles garage liability, garagekeepers, and dealers' physical damage (false pretense, etc.) for franchised and independent dealerships.

Choosing the Right Garagekeepers Basis

Garagekeepers questions are decided by the coverage basis, not by the facts of fault, so read for the basis first. On a legal-liability basis the insurer pays only when the garage is legally responsible for the damage to a customer's auto, so a fire that destroys a car with no negligence by the shop produces no payment. On a direct primary basis the insurer pays for damage to the customer auto regardless of fault and ahead of the customer's own coverage, and on a direct excess basis it pays regardless of fault but only after the customer's policy is exhausted.

The exam exploits this by giving identical facts and changing only the basis, expecting you to reach opposite dollar answers. Keep garagekeepers, which is bailee coverage for customers' vehicles, separate from garage liability, which is the shop's liability to third parties, because confusing the two is the other classic trap in this topic.