Care, Custody, Or Control

The Care, Custody, or Control exclusion in the Insurance Services Office (ISO) Commercial General Liability (CGL) Coverage Forms specifically excludes property damage to personal property in the insured's care, custody, or control. Its primary purpose is to keep the CGL Coverage Forms from covering first party claims. It is important to thoroughly understand the exclusion in order to properly advise insurance buyers and recommend coverages they need.

"CARE" DEFINED

Care is close attention to, watchful oversight, charge or supervision of, concern with, and attention to one's needs and those of others. In issues that involve negligence, the amount of care required under a given set of circumstances is in direct proportion to the apparent risk. As the level of danger increases, the level of caution required increases proportionately.

Black's Law Dictionary identifies and defines four types and degrees of care:

• Slight care is the kind of care that persons of ordinary prudence usually exercise about their own affairs that are of slight importance.
• Ordinary care is the degree of care that persons of ordinary care and prudence are accustomed to use and employ under the same or similar circumstances.
• Reasonable care is such a degree of care, precaution, or diligence as may fairly and properly be expected or required, having regard to the nature of the action or of the subject matter, and the circumstances surrounding the transaction.
• Great care is the kind of care that persons of ordinary prudence usually exercise about affairs of their own that are of great importance. It is that degree of care usually bestowed on the matter in hand by the most competent, prudent, and careful persons having to do with the particular subject.

"CUSTODY" DEFINED

Custody is the care and control of a thing. Black's Law Dictionary defines it as the keeping, guarding, care, watch, inspection, preservation, or security of a thing, carrying with it the idea of the thing being within the immediate personal care and control of the person who has custody of it.

The American Heritage College Dictionary defines it as the act or right of guarding, especially when such a right has been granted by a court. Webster's Seventh New Collegiate Dictionary defines custody to mean immediate charge and control exercised by a person or an authority.

"CONTROL" DEFINED

Control means to exercise restraining or directing influence over, or to regulate, restrain, dominate, curb, hold from action, overpower, counteract, or govern. Black's Law Dictionary defines it to mean power or authority to manage, direct, superintend, restrict, regulate, direct, govern, administer, or oversee.

HOW THE CGL COVERAGE FORMS EXCLUDE SITUATIONS THAT INVOLVE CARE, CUSTODY, OR CONTROL

General Liability Exclusion

The ISO CGL Coverage Forms exclude many types of property damage losses under Exclusion j. Damage to Property. Item (4) states that the insurance company does not pay for property damage to personal property in the insured's care, custody, or control. This exclusion is subject to two exceptions. It does not apply to property damage (other than damage by fire) to premises the named insured rents for seven or fewer consecutive days. It also does not apply to liability assumed under a sidetrack agreement.

Intent of the exclusion

The exclusion's intent is to exclude items subject to some type of bailment. However, the insured may still be protected against liability for damage to other items on the premises not subject to bailment.

There are no ISO CGL endorsements that cover property of others in the insured’s care, custody, or control. However, some insurance companies have developed their own endorsements that eliminate or modify this portion of the exclusion.

HANDLING CARE, CUSTODY, OR CONTROL EXPOSURES

The ISO CGL coverage forms are not designed to provide first party coverage for property owners or those legally liable for such property. This property is better covered under either a commercial property or inland marine coverage form.

Other options to consider are waiver agreements in a lease or written separately, eliminate/modify the care, custody, or control exclusion by endorsement, secure umbrella liability insurance that insures hazards that the underlying general liability coverage form does not cover.