What is care, custody, or control?
Care, custody, and control is an exclusion in general liability and commercial auto insurance policies that removes coverage for someone else’s property that is damaged while in your possession.
Your general liability or commercial auto insurance normally pays for damage you cause to another person’s property. However, if that property is temporarily in your safekeeping (for example, leased equipment used in your business), your insurance policy won’t pay the property owner for any damage that you cause.
Common business situations where the care, custody, or control exclusion applies
Several common scenarios could trigger the care, custody, or control exclusion. For example:
- An accounting firm damages leased business equipment, such as a photocopier.
- A restaurant with a coat-check service loses a customer’s property.
- An auto body repair shop mechanic drops a heavy piece of equipment and damages a customer’s car.
- A computer repair technician drops a customer’s laptop onto the floor, cracking its display screen and ruining its hard drive.
In the above cases, the people or companies with general liability insurance had someone else’s property in their temporary possession and then damaged it. Because of the care, custody, and control exclusion, their general liability insurance policy would provide no coverage.
Does the care, custody, and control exclusion apply to all types of third-party property?
The care, custody, and control exclusion doesn’t apply to real property, which includes buildings, permanently attached fixtures, or land. You may still have coverage for such damage under the real-property section of your general liability insurance policy.
What specifically triggers the care, custody, or control exclusion?
The exclusion applies if any of the following conditions are true:
- You are temporarily in charge of another person or company’s property or responsible for watching over it (care).
- You are responsible for safeguarding the property (custody).
- You have power or authority to manage, direct, or oversee the property (control).
If any of the above situations occurs, the care, custody, and control insurance exclusion will apply, and your insurer will not cover the property owner for any damage you cause.
Does this mean you will always be at risk when you have third-party property in your possession?
No. Fortunately, there are specialized insurance policies designed to cover property damages that could be impacted by the care, custody, and control exclusion. For example, if you are in the freight industry or operate an auto repair shop, you can purchase dedicated motor truck cargo insurance or garage keepers’ insurance that will protect you in case you damage a customer’s property.
Compare quotes from trusted carriers with Insureon
If you often safeguard customer property in your line of work, work with an Insureon agent to explore your insurance options. Insureon helps you compare small business insurance quotes with one easy online application. Start an application today to protect your business property against damage or loss.
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