Damage to Property in Insured’s "Care" is Excluded

The operator of a landscaping and excavating business hired the insured, a self-employed welder, to perform welding repairs on a self-propelled loading machine. The welder went to a construction site where the machine was located. He began using a blow torch to remove an old weld. It was on a crack where the bucket was mounted to the loader. During this work, smoke poured from underneath, and the loader was quickly destroyed by fire.

The welder requested coverage from his general liability insurer when the loader’s owner sued him for the fire loss. The insurer denied coverage, relying on the familiar CGL exclusion for ". . . . property damage to property in the care, custody or control of anyone we protect or over which anyone we protect is exercising physical control. . . ." The insured sued the insurer and its agent, seeking enforcement of coverage under the policy.

The crux of the matter was the meaning of "care, custody, or control." From the evidence, the court determined that the insured did not have custody or control of the loader. It was undisputed that the son of the machine owner, who worked in the excavating business alongside his father, retained the keys to the loading machine, showed the defect requiring repair to the welder, and stood at his side during the entire, albeit brief, time he worked. In effect, the excavator "never delivered the loader to plaintiff under contract or otherwise, never relinquished custody of the loader and never relinquished control over the loader."

However, the court said that "only one of the three criteria must be present before the clause operates to deny coverage." It found that the loader was in the "care" of the insured during his work. It was under his supervision while he was working. Citing precedent, if the loading machine were incidental to the property upon which he was working, the exclusion would not apply. Such was not the case. Supervision of the property damaged was essential for the work involved.

Supervision and care of the damaged property having been established, the court rendered judgment in favor of the insurance company and its agent and against the insured. The exclusion was found applicable.

Beltz, Plaintiff v. Erie Insurance Exchange Et Al., Defendants. Pennsylvania Court of Common Pleas of Lehigh County. No. 88-C-2680. March 28, 1991. CCH 1991-92 Fire and Casualty Cases, Paragraph 3281.