If you’ve read the fine print of your business insurance policy – and you should always read the fine print – you’ve probably come across the terms “care,” “custody,” and “control.” But do you understand their significance and how they affect what your policy covers?

As a business owner, you should have insurance that protects you against many scenarios so the loss of property or legal liability doesn’t put you out of business. That includes commercial liability insurance and specific products such as error and omission insurance and cyber liability protection. Whether you lose equipment, information, or facilities necessary for your operations or face a lawsuit due to an incident at your business, you have many coverage options.

Care, custody, and control are important terms because they’re all about not being covered and apply to many types of insurance.

An auto repair technician working on a vehicle

Understanding Care, Custody, and Control in a Business Insurance Policy

A care, custody, and control insurance exclusion is found in many policies – it removes compensation for the insured when a property placed in their care is damaged.  

The exclusion is generally applicable to property not owned by the insured. So, if an individual damages property in their care but doesn’t own said property, the insurance policy won’t cover the damaged or lost property.

When Do Care, Custody, and Control Apply?

This type of exclusion applies if any one of the three terms is true:

  • Care is when you, as the insured, are responsible for overseeing the property for a set amount of time.
  • Custody means you, as the insured, have been placed in charge of the property.
  • Control means you, as the insured, have power over the property.

These exclusions are different in every scenario – no specific definition or guideline would determine if compensation is owed or withheld. That means similar situations might have different outcomes when an insurance provider decides whether coverage applies or not based on numerous factors.

Here are a few examples of when care, custody, and control might come into play:

  • If you run an auto repair shop, drop a heavy wrench on a customer’s car, and dent the hood, your insurance may not cover that damage.
  • Your restaurant’s coat-check service loses a customer’s jacket or another item.
  • If your office-based business damages a photocopier or other equipment you’re leasing.

What Is the Difference Between General Liability and Care, Custody, and Control Liability Insurance?

Your general liability insurance will cover you if you sell a skincare product to a client and they successfully sue you for bodily injury because they had a severe skin reaction. Or if you gouge your customer’s floors when delivering a couch to their home, and they sue you for property damage. However, if said couch was damaged while in your custody for reupholstering, your general liability insurance isn’t going to cover you.

There are options to purchase different coverages as part of an overall policy to account for any gaps in your protection because of a care, custody, and control exclusion. Speak to a licensed Zensurance broker to review your coverage to make sure you’re not exposed to such a risk.

Do Care, Custody, and Control Apply to Commercial Property?

A care, custody, and control exclusion doesn’t apply to real property, including land, buildings, and permanently attached fixtures. 

How Does Business Insurance Help When You Have Care, Custody, and Control of Someone’s Property?

Your business insurance works in tandem with specific insurance products that fill the gap left by exclusions that are geared toward the nature of your business – many of the scenarios you might encounter during the course of business will benefit from general liability insurance and additional options that address care, custody, and control of other people’s property.

Auto repair shop liability insurance covers auto body repair shops and mechanics that offer a wide range of services. Within a comprehensive liability insurance package that protects them from third-party bodily injury or property damage claims, you can purchase garage liability insurance. This coverage contains special endorsements that cover vehicles in the care, custody, and control of your auto repair shop and third-party liability coverage if your employees need to drive a customer’s car while it is in your shop’s possession.

If you start a dog walking business, you’ll want tailored insurance coverage that protects you from liability and includes an option for “animal liability” coverage, which would otherwise be an exclusion.

With all insurance products, it’s important to understand what your policy covers and what it does not – including care, custody, and control exclusions. Adding the right options to your business insurance will mean you’re covered for both liability and the property of others that are your responsibility to protect.

– Reviewed by Matt Jardine, Team Lead, Property & Hospitality, Zensurance.

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About the Author: Gary Hilson

Gary Hilson has more than 20 years of experience writing about B2B enterprise technology. He has been published by EE Times, Network Computing, EBN Online, Computing Canada, Channel Daily News, and others. A Zensurance customer, when he’s not tapping on the keyboard, Gary collects comic books, attends live theatre, constructs Lego, and buys books he always intends to read.