E. Garagekeepers Coverage
This coverage is a form of bailee liability designed to cover damage to autos belonging to others while in the insured's care.
The care, custody and control exclusions in the liability sections create the need for this coverage.
The wording shown here provides garagekeepers coverage only on a legal liability basis. The insured must be negligent in causing the damage before the policy will respond. Broader coverage is available so that the policy would respond regardless of negligence (direct primary or direct excess) by checking a box in Item Five of the Declarations and charging an additional premium.
With the direct excess option, coverage is excess over any coverage provided by the customer’s insurance, but could be used to cover the customer's physical damage deductible, subject to the auto dealer’s deductible on the garagekeepers coverage.
It might also be used to pay for a substitute vehicle while the customer's auto is being repaired, since the definition of "loss" includes loss of use for the purpose of garagekeepers coverage (see Definitions). If the customer has no direct insurance to cover any part of the loss, garagekeepers coverage with the excess option becomes primary.
In no event should the election of the direct excess option, for which the insured is charged additional premium, provide less coverage than that provided by the legal liability coverage in the basic policy. If the insured is negligent, the garagekeepers coverage should pay the full amount of the claim (subject to the deductible) without consideration for the customer's own insurance.
With the direct primary option, any "loss" to the customer's auto, as long as damage is caused by a covered peril, will be covered without regard either to the insured's negligence or the customer's own insurance.
See technical report Garagekeepers Options on the Auto Dealers Coverage Form.