Protect Your Business: Understanding Care, Custody, And Control Exclusion
One of the most significant risks businesses face is the possibility of damage to property in their temporary possession. This is especially true for companies that offer repair, maintenance, or transportation services. Despite insurance coverage, business owners may be shocked to learn that their policies do not cover damage to property they are responsible for.
This is due to the care, custody, and control exclusion common in many insurance policies. Understanding and protecting against this exclusion is crucial for businesses to avoid unexpected financial losses.
The care, custody, and control exclusion removes coverage for any damage or loss to another person’s property while it is under the temporary care of the insured. This exclusion is typically found in general liability and property insurance policies and can apply to various business activities.
For example, if a construction company damages a client’s property while working on a project, the care, custody, and control exclusion would prevent the company’s insurance policy from covering the damage. As such, businesses need to be aware of this exclusion and take steps to mitigate its associated risks to avoid costly consequences.
Key Takeaways
- The care, custody, and control exclusion removes coverage for damage caused to another person’s property while in your temporary possession and applies to third-party property temporarily in your safekeeping.
- The exclusion applies if you are temporarily in charge of another person or company’s property, responsible for safeguarding the property, or have power or authority to manage, direct, or oversee the property.
- The exclusion excludes real property, including buildings, permanently attached fixtures, and land.
- Specialized insurance policies such as dedicated motor truck cargo or garage keepers insurance can protect freight or auto repair businesses. In contrast, general liability insurance provides many benefits for businesses, but the cost varies depending on the business and its risks.
Exclusion Explanation
The care, custody, and control exclusion removes coverage for damage caused to third-party property while temporarily possessing a business or individual. As explained in the pre-existing knowledge, this exclusion applies if the company or individual is responsible for safeguarding the property, has the power or authority to manage or direct the property, or is temporarily in charge of another person or company’s property.
This means that if a business damages or loses a customer’s property while in its possession, it will not be covered under the general liability insurance policy.
Coverage limitations are standard exclusions in insurance policies designed to protect the insurer from excessive risk. The care, custody, and control exclusion is a typical limitation in general liability insurance policies.
It applies to third-party property that is temporarily in the possession of a business or individual.
While this exclusion can be problematic for businesses that handle customer property, specialized insurance policies, such as motor truck cargo insurance or garage keepers insurance, can provide coverage for these situations.
Specialized Insurance Options
Specialized insurance policies, such as dedicated motor truck cargo or garage keepers insurance, cover businesses in specific industries. These policies are designed to protect businesses that deal with valuable property, such as cargo or vehicles, and can offer more comprehensive coverage than a general liability insurance policy.
Here are some key benefits of specialized insurance policies:
- Cargo insurance covers goods transported by truck, train, or other means of transportation. This policy can protect against cargo theft, damage, or loss and may also include coverage for liability claims related to the cargo.
- Garage keepers insurance is designed for businesses that operate auto repair shops or other facilities where vehicles are stored. This policy can protect against damage to customers’ vehicles while in your care, custody, or control.
- Specialized insurance policies can be tailored to the specific needs of your business, so you can get the coverage you need without paying for unnecessary coverage.
- These policies can also provide peace of mind for business owners, knowing that their valuable property is protected.
- Working with an experienced insurance agent can help you find the right policy for your business and ensure you have the coverage you need to protect your assets.
Specialized insurance policies can provide valuable protection for businesses in specific industries.
Whether you operate a trucking company, auto repair shop, or other business that deals with valuable property, it’s essential to consider the benefits of dedicated motor truck cargo or garage keepers insurance to ensure you have the coverage you need to protect your business.
Other Insurance Considerations
Small business owners should be aware that their personal car insurance may not provide coverage for business use and should consider their insurance options carefully to ensure they have adequate protection. Personal car insurance policies are designed to provide coverage for personal use of a vehicle, such as commuting or running errands.
If a small business owner uses their personal vehicle for business purposes, such as delivering goods or transporting clients, they may not be covered in the event of an accident. Small business owners need to review their personal car insurance policy and consider purchasing commercial auto insurance to ensure adequate protection for their business use of their vehicle.
When starting a new business, it is essential to consider the costs associated with insurance.
While some insurance policies, such as liability insurance, may be optional, other policies, such as workers’ compensation insurance, may be required by law. Small business owners should budget for insurance costs when planning their startup costs and consider the potential risks associated with their business. Small business owners can protect their businesses from unexpected expenses and liabilities by investing in the appropriate insurance policies.
| Type of Insurance | Description |
|---|---|
| Liability Insurance | Provides coverage for legal expenses and damages resulting from negligence or accidents that occur on the business premises or as a result of business operations. |
| Property Insurance | Provides coverage for damage or loss of business property, including buildings, equipment, and inventory. |
| Workers’ Compensation Insurance | Provides coverage for medical expenses and lost wages for employees who are injured on the job. |
| Commercial Auto Insurance | Provides coverage for vehicles used for business purposes, including liability and physical damage coverage. |
Frequently Asked Questions
What is the typical cost of general liability insurance for small businesses?
The average cost of general liability insurance for small businesses varies depending on the industry, location, and coverage limits. Small business owners should compare quotes to find the best coverage at a reasonable price.
Are any industries or businesses exempt from the care, custody, and control exclusion?
No industries or businesses are exempt from the care, custody, and control exclusion. This exclusion has legal implications for businesses temporarily in charge of another person or company’s property and can result in uncovered damages.
Does general liability insurance cover damages cause by employees?
General liability insurance may cover damages caused by employees, but coverage limitations may apply. Employee negligence may also be excluded under certain circumstances, so reviewing the policy carefully and considering additional coverage options is essential.
Can a business owner be personally liable for damages not covered by their insurance policy?
Liability protection offered by an insurance policy is not absolute, and coverage limitations exist. A business owner can be held personally liable for damages not covered by their insurance policy, which can result in financial loss and legal consequences.
Is it recommended for small business owners to have general liability insurance and specialized insurance policies?
Small business owners should consider specialized insurance policies, such as motor truck cargo or garage keepers and general liability insurance. Relying solely on general liability insurance may not provide adequate coverage for specific risks, while specialized insurance offers tailored benefits.
Conclusion
Care, custody, and control exclusion are crucial for business owners to consider when reviewing their insurance policies.
If a business is entrusted with someone else’s property and damaged in its care, the company may be held responsible for the financial losses incurred. To protect themselves from potential losses, businesses should explore specialized insurance options that cover care, custody, and control situations.
This may include purchasing a separate policy or adding an endorsement to an existing policy. It is also vital for businesses to review their insurance policies regularly and communicate with their insurance provider to ensure they have adequate coverage for their operations.
In addition to the care, custody, and control exclusion, there may be other exclusions or limitations in insurance policies that businesses should be aware of. This could include exclusions for certain types of property damage or limits on coverage for specific incidents.
By understanding the exclusions and limitations in their insurance policies, businesses can take proactive steps to mitigate potential risks and protect their financial interests. Understanding the care, custody, and control exclusion is crucial for companies to protect themselves from potential losses.
