Garage Coverage Form Overview
Who Needs This Coverage?
The Garage Coverage Form is designed for businesses that operate in the automobile industry:
Why Special Coverage?
These businesses have unique exposures: they regularly have customers' vehicles in their care, their employees test-drive vehicles, and they have liability for both their operations AND the vehicles they handle.
What Are "Garage Operations"?
Clear Definition
Garage operations means the ownership, maintenance, or use of locations for garage business and that portion of roads/ways that are next to those locations.
WHO
Auto dealerships, repair shops, service stations, body shops, car washes
WHAT
Liability from selling, servicing, storing, parking vehicles
WHERE
Garage premises and adjacent roads
Included Operations:
Selling autos
Storing autos
Servicing & repairing autos
Parking autos
Test drives
Customer vehicle handling
Examples of Covered Claims:
Customer Slips on Oil in Service Bay
Premises liability arising from garage operations - COVERED
Mechanic Test-Drives Car, Hits Pedestrian
Auto liability arising from garage operations - COVERED
Car Falls Off Lift, Damages Customer's Vehicle
Property damage arising from garage operations - COVERED
Body Shop Employee Damages Car During Repair
Liability from servicing operations - COVERED
NOT Garage Operations:
- - Manufacturing automobiles (use CGL policy instead)
- - Car rental agencies (need specialized rental policy)
- - Towing/road service as primary business (need towing policy)
- - Auto parts stores without service operations (use CGL)
Garage Coverage Form Sections
Section I: Covered Autos
Uses the same symbol system as the Business Auto Policy (1-9) to designate which autos are covered.
Section II: Liability Coverage
Provides liability coverage for:
- + Covered autos
- + Garage operations (premises and business activities)
- + Products - Completed Operations
Key Point: This is a combined form - it covers BOTH auto liability AND premises/operations liability in one policy!
Section III: Garagekeepers Coverage
Covers damage to customers' autos left in the insured's care for service, repair, storage, or parking.
(See detailed section below)
Section IV: Physical Damage Coverage
Covers damage to the insured's own vehicles (inventory, owned autos, etc.).
Garagekeepers Insurance - The Key Coverage
What Makes This Unique
Garagekeepers insurance covers damage to customers' vehicles while in the care, custody, or control of the garage. This is the opposite of physical damage coverage which covers the insured's OWN vehicles.
When Does Garagekeepers Apply?
Covers autos left with the insured for:
Types of Garagekeepers Coverage
Legal Liability Coverage
Only pays if the insured is legally liable for the damage.
Example: Mechanic damages a car during repair. Covered - insured was at fault.
Not Covered: A hailstorm damages parked cars. The garage wasn't at fault, so no coverage.
Direct Coverage (Primary)
Pays for covered losses regardless of fault - like first-party property insurance.
Example: A hailstorm damages customer cars in your lot. Covered - even though you weren't at fault.
Better Protection: Broader coverage = happier customers.
Exam Tip: Legal Liability vs Direct
Legal Liability = must be your fault. Direct = covered regardless of fault. Direct coverage is more expensive but provides better protection.
Garagekeepers Covered Perils
Coverage can be written for specific perils or comprehensive. Common covered perils include:
Collision
Comprehensive
Fire
Theft
Vandalism
Specified Perils
Exam Trap Alerts
Garagekeepers = Customer vehicles: This covers CUSTOMERS' cars, not the garage's own inventory.
Legal Liability vs Direct: Legal liability only pays if it's your fault. Direct pays regardless of fault.
Combined form: Garage Coverage Form combines auto liability AND premises/operations liability.
Who needs it: Auto dealers, repair shops, parking garages, service stations, body shops.
Care, custody, control: Garagekeepers applies when customer vehicles are in your possession.
Quick Summary
| Coverage | What It Covers |
|---|---|
| Garage Liability | BI/PD from garage operations AND covered autos |
| Garagekeepers | Damage to CUSTOMERS' autos in your care |
| Physical Damage | Damage to YOUR OWN autos (inventory, owned vehicles) |