Most, if not all, business liability policies exclude damage that you do to someone else’s property while it is in your Care, Custody or Control. This would include damage to property that you’re actually working on.
This is especially important for contractors. Let me explain why…
You are installing an expensive new kitchen into an existing home. While fastening the cabinets to the wall you accidentally drop an expensive cabinet onto a valuable counter top, causing extensive damage to both the cabinet and the counter top. Maybe, the cabinet then bounces off the tile floor, causing damage to the floor. That’s a lot of damage! Does your standard liability policy provide coverage for the cabinet? The Counter Top? The Tile Floor?
Suppose you’re the homeowner… Do you want the damaged property repaired or replaced without any cost to you?
As I mentioned above, most liability policies will exclude damage the contractor does to property that is in his/her care, custody or control. By definition, the kitchen cabinet is in the contractor’s control and, therefore, not covered by his standard policy. What about the counter top or the tile floor?
This scenario could, and probably does, happen. Without the proper coverage the contractor may be left with a large out-of pocket expense.
Erie Insurance, and other carriers, offers an endorsement that essentially removes this care, custody and contorl exclusion from the policy. Erie calls it “Voluntary Property Damage (VPD).” According to Erie’s policy language, this endorsement “provides coverage for unintentional damage to property of others caused by the insured while the property is in the care, custody or control of the insured.” It includes damage to property you are physically working on. Erie’s endorsement also includes property you have borrowed from others.
What is Care, Custody or Control? Unfortunately, it is often a gray area. It could be up to the courts to decide. According to an IA&B article by Jerry Milton, CIC, most courts indicate it means “actual possession or direct physical control of the property.”
So, it includes property you are actually working on and property of which you are in direct physical control…
Maybe the best way to describe property in your care, custody or control would be to provide some more real-world examples:
1) A Plumber installs a new sink in a homeowner’s bathroom. The plumber accidentally drops the sink, which causes damage to the sink and the bathroom floor. Is damage to the sink and/or floor covered without this VPD endorsement?
A: The floor is probably covered by the standard liability policy because it is not being worked on by the plumber. (I say “probably” because it really is up to the courts.) The sink is definitely not covered because the plumber was working directly on it. (If the plumber owns the sink he/she would need Installation Coverage, which provides insurance on property, equipment and fixtures that will be installed by the contractor.)
2) A contractor is drilling holes in a hardwood floor to install a new ventilation system. The drill slips and damages the hardwood floor. Is the floor covered without this VPD endorsement?
A: Probably not, as the floor will most likely be considered to be in the contractor’s care.
3) A paint contractor has a ladder against a wall and accidentally bumps the ladder causing damage to the wall. Is this covered without the VPD endorsement?
A: Again, probably not, as the wall will most likely be considered in the contractors care.
Now, if I’m a contractor working on your property and accidentally damage something of significant value, you would want it to be covered with no questions asked. You wouldn’t want to have a conversation with me or with my insurance agent as to whether the property was in my care, custody or control. You would simply want it covered.
Bottom Line, buy the Coverage! It takes away the gray area of care, custody and control. It protects contractors from potential large out of pocket expenses and, most importantly, it can keep your customers happy!