Masonry Magazine May 1966 Page. 9
"CARE, CUSTODY or CONTROL"
That Troublesome Exclusion
"Care, Custody or Control" is just one of the many important items covered in the second edition of the book "Insurance for Contractors." This excellent book by Walter T. Derk, Assistant Vice President, Fred S. James & Co., will be printed in its entirety in future issues of Masonry. Watch for this valuable article.
Although some major changes are about to occur in standard General Liability policy forms used by most insurance companies, the "care, custody or control" exclusion applicable to Property Damage Liability will still be a problem.
I have always felt that this exclusion is one which is talked about a great deal more than it is applied, but it continues to present a potential gap in your liability coverage. This article will briefly outline the problem and discuss some practical methods of closing that gap.
The new policy format excludes damage to:
1. property owned, occupied by or rented to the insured,
2. property used by the insured,
3. property in the care, custody or control of the insured, or
4. property over which the insured for any purpose is exercising physical control.
There probably is no reason to elaborate on paragraphs 1 and 2, since these are legal liability policies and most insurance buyers understand that they do not cover damage to their property.
Paragraphs 3 and 4 are the ones which keep attorneys and claim men busy. Particularly as respects contractors, drawing the line between damage to other people's property and property over which the contractor is exercising physical control is extremely difficult. Since it depends entirely upon the circumstances surrounding a given claim, no dogmatic statements can be made here to resolve that question entirely or make drawing that line much easier.
Broad Form Property Damage Endorsement
An important question often confronting the contractor is just how much of the property being worked on is in his care, custody or control. A ready solution to that problem is available through addition of a Broad Form Property Damage Liability Endorsement which may be added to your General Liability policy. The additional premium charge normally ranges to about 20% of the Property Damage premium otherwise developed. While continuing to exclude liability for damage to property actually being worked on, the endorsement deletes coverage only for that particular part, not the whole thing, provided the accident occurs away from the insured's own premises.
By selecting more precise and narrow language to define what is excluded, the endorsement minimizes a great many doubts about what is covered without the necessity of going to court for a decision. This rider is recommended if the price is right, so long as the contractor understands that it does not completely eliminate the exclusion itself.
Removal of the Exclusion
An alternative solution is outright removal of the exclusion from your basic liability insurance policies. Some carriers will go along with such requests for an additional charge, often a great deal of money, while most others refuse to alter their standard contracts on the theory that these exclusions were inserted by acknowledged experts who knew what they were doing. Because complete deletion of the exclusion drastically limits your choice of insurance markets and usually costs a lot of money, it can hardly be recommended as a standard solution.
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