View source for Definition:Care, custody, or control exclusion

🚫 '''Care, custody, or control exclusion''' is a standard provision found in [[Definition:Commercial general liability (CGL) insurance | commercial general liability (CGL)]] policies that removes coverage for damage to property that is in the insured's care, custody, or control at the time of loss. The exclusion exists because CGL policies are designed to cover damage an insured causes to third-party property — not property the insured is holding, using, storing, or working on, which falls closer to a [[Definition:Bailee liability | bailee]] or [[Definition:Inland marine insurance | inland marine]] exposure. For insurers and [[Definition:Underwriter | underwriters]], this exclusion is a critical boundary that prevents the general liability form from silently absorbing risks better suited to specialized coverages.

⚙️ In practice, the exclusion triggers whenever an insured has physical possession of or dominion over someone else's property and that property is damaged. A classic scenario involves a contractor who damages a client's equipment while performing work on-site, or a warehouse operator whose negligence destroys goods belonging to a customer. Because the CGL exclusion bars these claims, the insured must secure separate coverage — such as a [[Definition:Bailee's customer insurance | bailee's customer policy]], an [[Definition:Installation floater | installation floater]], or a [[Definition:Property insurance | property]] endorsement — to fill the gap. [[Definition:Claims adjuster | Claims adjusters]] must carefully analyze the facts of each loss to determine whether the insured exercised sufficient control over the property to activate the exclusion, a determination that often hinges on contract language and the physical circumstances at the time of damage.

💡 Failing to recognize this exclusion during the [[Definition:Risk assessment | risk assessment]] or policy placement process can leave policyholders with devastating uninsured losses — and expose [[Definition:Insurance broker | brokers]] and [[Definition:Insurance agent | agents]] to [[Definition:Errors and omissions insurance (E&O) | errors and omissions]] claims. Businesses that regularly handle, transport, or store third-party property need explicit counsel from their insurance advisors about the limitation and the supplemental coverages available. From an [[Definition:Underwriting | underwriting]] standpoint, the exclusion also keeps [[Definition:Premium | premiums]] on standard CGL policies manageable by carving out a class of loss that would otherwise dramatically widen the policy's exposure profile.

'''Related concepts:'''
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* [[Definition:Commercial general liability (CGL) insurance]]
* [[Definition:Bailee liability]]
* [[Definition:Inland marine insurance]]
* [[Definition:Policy exclusion]]
* [[Definition:Errors and omissions insurance (E&O)]]
* [[Definition:Contractual liability]]
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