Introduction to the Garage Coverage Form
For the Florida 2-20 General Lines Exam, understanding the Garage Coverage Form is essential. This policy is unique because it combines elements of General Liability and Business Auto insurance into a single contract. It is specifically designed for businesses that involve the use of automobiles in their daily operations, such as auto dealerships, repair shops, and service stations.
Because standard Commercial General Liability (CGL) policies typically exclude coverage for automobiles and the Business Auto Policy (BAP) does not cover premises and operations hazards for these specific industries, the Garage Coverage Form fills the gap. For a comprehensive look at how this fits into the broader insurance landscape, see our complete FL 2-20 exam guide.
Target Businesses for Garage Coverage
Section II: Liability Coverage
Section II of the Garage Coverage Form provides Liability Coverage. This is split into two distinct areas of protection:
- Garage Operations - Other Than Covered Autos: This functions similarly to a Commercial General Liability policy. It covers bodily injury (BI) and property damage (PD) arising out of the ownership, maintenance, or use of the garage premises, as well as all operations necessary or incidental to the garage business.
- Garage Operations - Covered Autos: This functions like a Business Auto Policy. it covers BI and PD resulting from the ownership, maintenance, or use of covered autos.
It is important to note that the "insured" includes the named insured, partners, and employees while acting within the scope of their duties. However, a key exclusion on the exam involves the use of customer vehicles—liability for damage to the customer's vehicle itself is NOT covered under Section II; that is the role of Garagekeepers coverage.
Garage Liability vs. Garagekeepers Coverage
| Feature | Section II: Garage Liability | Section III: Garagekeepers |
|---|---|---|
| Primary Purpose | Legal Liability for BI/PD to third parties | Damage to customer vehicles in care |
| Property Covered | Third-party property (excluding vehicles in care) | Customer vehicles left for service/storage |
| Trigger | Negligence in operations or auto use | Legal liability or direct damage (per option) |
Section III: Garagekeepers Coverage
Garagekeepers Coverage is perhaps the most tested area of this form on the practice FL 2-20 questions. It addresses the "Care, Custody, and Control" exclusion found in most liability policies. It protects the insured against loss or damage to a customer's vehicle while it is in the insured's care for servicing, repair, storage, or safekeeping.
There are three ways to trigger this coverage:
- Legal Liability: The standard form. It only pays if the garage is found legally liable for the damage (e.g., a mechanic crashes a customer's car).
- Direct Primary: Pays regardless of fault. If a hail storm damages all cars on the lot, this coverage pays even if the garage owner wasn't negligent.
- Direct Excess: Pays regardless of fault, but only after the customer's own insurance has been exhausted.
Exam Tip: The Symbols
The Garage Form uses numerical symbols (21-29) to define covered autos. Symbol 21 (Any Auto) is the broadest, while Symbol 29 (Non-Owned Autos Used in Garage Business) is commonly used for service-only risks. Dealers typically use Symbol 22 (Owned Autos Only) for their inventory.
Section IV: Physical Damage Coverage
Section IV provides Physical Damage Coverage for the insured's own vehicles (typically a dealer's inventory). This is distinct from Garagekeepers, which covers customers' vehicles. Coverage options include:
- Collision: Coverage for damage caused by the vehicle hitting another object or overturning.
- Comprehensive: Coverage for almost any cause of loss except collision or specific exclusions (theft, fire, vandalism, etc.).
- Specified Causes of Loss: A cheaper, named-peril alternative to Comprehensive, covering items like fire, lightning, explosion, theft, and windstorm.
For auto dealers, this section often includes a "Reporting Form" basis, where the dealer reports their total inventory value monthly to ensure adequate limits are maintained as stock fluctuates.