A general liability policy pays when you damage someone else's property. So contractors are surprised to learn there is a large category of someone else's property it will not pay for: property that was in your care, custody or control when you damaged it.

Where the exclusion lives

The standard CGL form excludes property damage to:

  • Personal property in the care, custody or control of the insured
  • That particular part of real property you or your subcontractors are performing operations on, if the damage arises out of those operations
  • That particular part of any property that has to be restored, repaired or replaced because your work was performed incorrectly on it

The logic underwriters apply is that this is a business risk, not a liability risk. If you accept an item into your possession to work on it, the carrier's view is that keeping it safe is your job, not theirs.

A janitorial example

A cleaning contractor has a night contract for a medical office. Two things go wrong on the same shift.

Covered: a crew member leaves a wet floor unmarked and a nurse arriving early slips and breaks her wrist. That is bodily injury from the contractor's operations, and general liability responds.

Not covered: the same crew moves a $30,000 ultrasound cart out of the way to strip and wax the floor, and it tips over. That machine was in their care, custody and control at the moment it was damaged. The GL policy excludes it. The clinic sends the contractor an invoice for $30,000 and the contractor's carrier declines the claim.

Same crew, same night, same policy. One claim paid, one not.

How to actually cover it

There are a few options, and which one fits depends on the trade:

  • A care, custody or control endorsement — some programs, especially janitorial and service-contractor programs, will add back a limited amount of CCC coverage. Expect a modest sublimit and often a separate deductible.
  • Bailee coverage — inland marine coverage for customers' property you take in to work on. The right answer for anyone who accepts property onto their premises: repair shops, dry cleaners, restorers.
  • An installation floater — for contractors installing materials at a job site, covering the materials until the work is accepted.
  • Contractors equipment or rented equipment coverage — for machinery you lease rather than own.

The distinction clients get wrong

If your employee breaks a client's property, that is a care, custody or control problem. If your employee steals a client's property, that is not — it is an employee dishonesty loss, and it is handled by third-party coverage on a commercial crime policy. Two different gaps, two different fixes, and a janitorial or in-home service contractor typically has both.

What to check on any service account

Read the customer contract. Cleaning, maintenance, and IT service agreements often make the contractor responsible for damage to customer property in plain language, and the contractor signs it without realizing the GL policy excludes the exact thing they just agreed to pay for.

Related: Crime insurance vs. property theft coverage

Educational only — confirm against the actual policy form and endorsements.