12.4 Garage Coverage Form and Garagekeepers

The Garage / Auto Dealers Form

Businesses whose core operation is autos - dealers, repair shops, service stations, parking garages - need both auto liability and premises/operations (general) liability in one place. ISO's Auto Dealers Coverage Form (CA 00 25) (historically called the Garage Coverage Form) bundles these for franchised and used-car dealers; smaller non-dealer repair and service risks are handled on a comparable garage approach.

The defining feature is that a single form provides both auto liability and general liability - coverages a standard Business Auto Policy and a separate general liability policy would otherwise split.

The Auto Dealers form uses its own symbol set (Symbols 21-31) rather than the 1-9 symbols of the Business Auto Coverage Form - a frequently tested distinction.

Garagekeepers - Bailee Coverage

When a shop takes custody of a customer's vehicle, it becomes a bailee (one holding another's property for a purpose). Garagekeepers coverage pays for damage to those customer autos from covered causes - fire, theft, vandalism, collision - while in the insured's care, custody, or control. It is offered three ways:

Exam point: Under Legal Liability, if a customer's car is stolen with no negligence by the shop, there is no payment. Under Direct Primary, the shop's policy pays first even without fault - which is why busy dealers prefer it. Garagekeepers exists precisely because the general liability portion excludes property in the insured's care, custody, or control.

Worked Garagekeepers Example

A detail shop holds eight customer cars overnight. A fire - with no negligence by the shop - destroys three of them, each worth $20,000 (total $60,000). The garagekeepers limit is $100,000 with a $500 deductible per location.

This is why high-volume dealers and valet operations almost always buy Direct Primary: it protects the customer relationship even when the business did nothing wrong.

Common Confusions

• Garagekeepers covers customers' autos, not the dealer's own inventory (that is physical damage on the form).
• The general liability portion's care, custody, or control exclusion is the reason garagekeepers must be bought separately.
• A plumber with two vans does not need a garage form - that is a plain Business Auto Policy. The garage approach is reserved for businesses in the auto business.

The Direct Excess Basis in Detail

Direct Excess garagekeepers sits above the customer's own auto insurance. It pays for a covered loss to a customer car, but only for the amount the customer's personal policy does not cover.

Worked example: A customer's $25,000 car is destroyed by fire at the shop. The customer's own auto policy carries Comprehensive with a $1,000 deductible and pays $24,000. Direct Excess garagekeepers then pays the remaining $1,000 (subject to the garagekeepers deductible). Had the customer carried no Comprehensive at all, Direct Excess would respond as primary for the full covered loss.

Choosing Among the Three Options

Trap: Garagekeepers and the general liability care, custody, or control exclusion are tested together - if a question describes damage to a customer's car in the shop and asks why CGL-style premises coverage will not pay, the answer is the care-custody-control exclusion, which is exactly what garagekeepers is bought to address.

Garage Coverage vs. Garagekeepers — Sorting the Three Exposures

Auto dealers, repair shops, and service stations have three distinct exposures the exam keeps separate:

1. Garage liability — the business's own BI/PD liability arising from garage operations and the use of covered autos (essentially CGL + auto liability combined for an auto business).
2. Garagekeepers — physical damage to customers' autos left in the insured's care, custody, or control (e.g., a customer's car damaged by fire or theft while in for service).
3. Garage physical damage / dealers' open lot — damage to the dealer's own inventory.

Garagekeepers' Three Coverage Triggers

Garagekeepers can be written on one of three bases, and matching the basis to the fact pattern is the tested skill:

Worked example: a hailstorm dents 15 customer cars on the lot through no fault of the shop. Under legal liability garagekeepers there is no coverage (the shop was not negligent). Under direct (primary or excess) garagekeepers, the damage is covered because fault is irrelevant.

Exam trap: the "care, custody, or control" exclusion in a standard CGL is exactly why a garage needs garagekeepers — CGL excludes damage to property in the insured's care, so customer vehicles must be insured under garagekeepers, not general liability. The modern ISO Garage Coverage Form (CA 00 05) and Auto Dealers Coverage Form (CA 00 25) bundle these; auto dealers also need dealers' open-lot physical damage for inventory.