Care, custody or control

How it works

General liability typically helps pay when your business damages someone else’s property. But most general liability policies carve out property that’s in your care, custody or control, meaning things you’ve borrowed, rented, are storing for someone or are actively working on. Typical policies also exclude damage to the particular part of someone’s property you were working on when your work caused the damage.

The reasoning is that liability insurance is built for harm you cause to other people and their things out in the world. Property you’ve taken into your hands is a different kind of risk, and insurers expect it to be covered by a policy written for that purpose.

The exact wording varies by policy, and how it applies can turn on the facts of a loss, so the exclusionExclusionAn exclusion is a provision in an insurance policy that removes coverage for specific causes, types of loss, property or activities the policy would otherwise cover.Read the definition in your own policy is what counts.

How businesses fill the gap

• Auto shops use garagekeepers insurance for customers’ cars in the bay, on the lot or on a test drive. It comes as legal liabilityLegal liability coverageLegal liability coverage pays for damage to customers’ property in your care only when your business is legally responsible for it, such as through negligence.Read the definition, which pays when you’re at fault, or direct coverageDirect coverageDirect coverage is a garagekeepers option that pays for covered damage to customers’ vehicles in your care whether or not your shop was at fault.Read the definition, which pays regardless of fault.
• Other businesses that hold customers’ goods, like repair services or dry cleaners, may look at bailee coverage, a form of inland marineInland marine insuranceInland marine insurance covers business property that moves or is kept away from your main location, like tools on job sites, goods in transit and property held for others.Read the definition insurance.
• Property policies sometimes include a small amount of coverage for other people’s property at your premises, alongside your business personal propertyBusiness personal propertyBusiness personal property (BPP) is the movable property your business owns and uses, such as equipment, furniture, inventory and supplies, as covered by a commercial property policy.Read the definition.

Why it matters for a small business

Owners often assume general liability covers anything they damage. If your business routinely holds, stores or works on things that belong to customers, ask how that property is covered before something goes wrong.