insurance

Care Custody and Control

An insurance policy exclusion that eliminates coverage for damage to property in the insured's care, custody, or control at the time of loss. This exclusion prevents liability insurance from functioning as property insurance and encourages proper care of others' property.

Example

“The contractor's liability insurance denied the claim for damage to the client's expensive artwork because it was excluded under the care, custody and control provision while in the contractor's possession.”

Memory Tip

Remember the '3 C's' - if you have Care, Custody, and Control of someone's property, your liability insurance won't Cover it (the 4th C).

Why It Matters

This exclusion can leave businesses and individuals exposed to significant financial losses when handling others' property, making separate bailment or inland marine coverage essential. Understanding this limitation helps prevent costly coverage gaps and ensures appropriate insurance protection for property entrusted to your care.

Common Misconception

Many business owners assume their general liability insurance covers all property damage they might cause, not realizing the care, custody and control exclusion eliminates coverage for property they're handling or storing. Others think the exclusion only applies to property they formally agree to protect, when it actually applies to any property under their physical control.

In Practice

Maria's cleaning service accidentally damages a client's $5,000 Persian rug while cleaning their home. Because the rug was in Maria's care, custody, and control during the cleaning process, her $1 million general liability policy denies the claim under this exclusion. Maria must pay the $5,000 replacement cost out of pocket, or she could have purchased separate bailment coverage for $200 annually that would have covered this exact situation, protecting her from financial loss while servicing clients' property.

Etymology

Combines three legal concepts: 'care' from Latin 'cura' meaning attention, 'custody' from Latin 'custodia' meaning guardianship, and 'control' from Middle English meaning to regulate or direct.

Common Misspellings

care custody and contolcare custidy and controlcare custody and controlecare custoday and control

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