11.3 Garage Coverage Form
Neither the Business Auto Coverage Form nor the Commercial General Liability Coverage Form is designed to provide the specialized coverage needed by automobile-related businesses that accept customers’ autos into their care, custody, or control. Examples include auto dealerships, repair shops, service stations, and similar operations. A Commercial General Liability policy generally excludes automobile exposures, while the Business Auto Coverage Form has limitations for non-owned autos, especially when those autos are not being operated in the business of the insured. Because of these gaps, automobile businesses need specialized coverage forms designed for their particular exposures.
The Garage Coverage Form is designed to reduce the coverage gaps and overlaps that may occur when automobile-related businesses rely on multiple commercial lines policies. This form combines several important coverages in one policy, including general liability coverage for premises and products exposures, auto liability coverage, physical damage coverage, and Garagekeepers coverage for customers’ autos. The form is intended for businesses with garage operations. Garage operations generally include the ownership, maintenance, or use of locations for businesses engaged in the sale, service, repair, parking, or storage of customers’ automobiles.
Eligible businesses include automobile dealerships, public repair shops, service stations, attended parking facilities, and other automotive businesses that act as bailees. A bailee is a business that temporarily assumes the care, custody, or control of a customer’s vehicle for purposes such as repair, servicing, storage, parking, or sale.
Note
In some jurisdictions, the Garage Coverage Form may not be available. In these areas, automobile dealerships may be eligible for the Auto Dealers Coverage Form. This form provides coverages similar to those found in the Garage Coverage Form but includes provisions designed specifically for dealership operations. Other automotive businesses that accept customers’ vehicles, such as repair shops and service facilities, may obtain Garagekeepers coverage by adding an endorsement to their Business Auto policy.
Policy Structure
The Garage Coverage Form is organized into six sections, each addressing a different part of the coverage:
- Section I – Covered Autos: Identifies the vehicles that qualify as covered autos under the policy.
- Section II – Liability Coverage: Provides coverage for certain bodily injury and property damage claims arising from garage operations and covered autos.
- Section III – Garagekeepers Coverage: Covers damage to customers’ autos while they are in the insured’s care, custody, or control.
- Section IV – Physical Damage Coverage: Provides coverage for physical damage to covered autos owned by the insured.
- Section V – Garage Conditions: Explains the duties, rights, and policy conditions that apply to the coverage.
- Section VI – Definitions: Defines important terms used throughout the coverage form.
Section I – Covered Autos
The Garage Coverage Form uses a schedule of covered auto designation symbols similar to the schedule found in the Business Auto Coverage Form. The vehicle categories represented by Symbols 1–9 in the Business Auto policy are renumbered as Symbols 21–29 in the Garage Coverage Form. The Garage Coverage Form also adds two symbols designed specifically for vehicles associated with automobile businesses:
| Symbol | Description |
|---|---|
| Symbol 30 | Autos Left with You for Service, Repair, Storage, or Safekeeping. This includes land motor vehicles, trailers, or semitrailers left in the care, custody, and control of the insured. |
| Symbol 31 | Dealers Autos, Physical Damage Coverages, which is for autos described in the Declarations. |
As with the Business Auto Policy (BAP), when the Garage policy provides liability coverage, certain additional vehicles automatically qualify as covered autos. These include temporary substitute autos and trailers designed for travel on public roads with a load capacity of 2,000 pounds or less.
Section II – Liability Coverage
The Garage Coverage Form provides two broad categories of liability coverage:
- Garage Operations—Other Than Covered Autos
- This coverage applies to bodily injury or property damage arising from the insured’s garage premises and business operations, other than the ownership, maintenance, or use of covered autos. It includes premises and operations liability, products liability, and completed operations liability, making it similar to the protection provided by a Commercial General Liability policy.
- This category also includes certain contractual liability exposures. Coverage may apply when the insured assumes liability under an insured contract or when the insured would have been legally liable even if the contract or agreement had not existed.
- Garage Operations—Covered Autos
- This coverage applies to bodily injury or property damage arising from the ownership, maintenance, or use of covered autos. It functions similarly to the liability coverage provided by a Business Auto policy.
The Garage Coverage Form does not automatically include coverage for personal and advertising injury liability, host liquor liability, or fire legal liability. However, these coverages may be added to the policy by endorsement when needed.
Other provisions in Section II—Liability Coverage are similar to those found in the Business Auto Coverage Form, including the rules identifying who qualifies as an insured, available coverage extensions, and applicable exclusions. Section II excludes liability covered under Workers’ Compensation laws and damages arising from the recall of the insured’s products. It also excludes damage to:
- Property held for sale by the insured
- Property being transported by the insured
- Property in the insured’s care, custody, or control
An exception applies to liability the insured assumes under a sidetrack agreement.
The two categories of liability coverage are subject to different policy limits:
- Garage Operations—Other Than Covered Autos is subject to both an each-accident limit and an aggregate limit. The each-accident limit is the most the insurer will pay for damages arising from a single accident, while the aggregate limit is the most the insurer will pay for all covered damages during the policy period.
- Garage Operations—Covered Autos is subject to an each-accident limit, which is the most the insurer will pay for all covered damages resulting from any one accident.
A $100 deductible applies to property damage to an auto when the damage results from work performed on that auto by an insured. The insured is responsible for the first $100 of each covered loss, and the insurer pays the remaining covered amount, subject to the applicable policy limits.
Section III – Garagekeepers Coverage
Garagekeepers coverage is a form of bailee coverage that protects against damage to a customer’s auto or automotive equipment while it is in the insured’s care, custody, or control for servicing, repairing, parking, or storing. Similar to the Physical Damage coverage provided by the Business Auto Policy, the insured may select:
- Collision coverage
- Comprehensive coverage
- Specified Causes of Loss coverage
Under Garagekeepers coverage, Specified Causes of Loss applies only to the following named perils:
| Fire, lightning, or explosion | Theft | Mischief or vandalism |
Section III—Garagekeepers Coverage includes the insurer’s duty to defend the insured against covered claims and provides applicable supplementary payments in addition to the coverage limit. The following parties qualify as insureds while acting within the scope of their duties:
- The named insured
- The named insured’s partners
- The named insured’s employees
- The named insured’s directors
- The named insured’s shareholders
Garagekeepers coverage does not apply to:
- Liability the insured assumes under a contract
- Theft committed by an insured
- Loss caused by defective parts or materials
- Loss resulting from faulty work performed by the insured
Sound-reproducing equipment is covered only when it is permanently installed in the customer’s auto. Devices designed to detect speed-measuring equipment, such as radar or laser detectors, are not covered.
The limit of insurance shown in the Declarations is the most the insurer will pay for any one covered loss at a single location, regardless of how many customers’ autos are damaged in that loss. The applicable deductible also applies to each covered loss at each location.
Section IV – Physical Damage Coverage
The Garage Coverage Form provides physical damage coverage for covered autos that the named insured owns, hires, rents, leases, or borrows. This section protects the insured’s own vehicles rather than customers’ autos. The coverage generally operates in the same manner as the physical damage coverage provided by the Business Auto Coverage Form.
The limits of insurance for physical damage coverage may be established using monthly or quarterly reporting forms, which adjust coverage based on the values reported by the insured. Alternatively, coverage may be written on a nonreporting basis, using a fixed limit shown in the policy.