An insured tenant backs their vehicle into the building that houses their office. The adjuster denies the claim based on the Care, Custody or Control exclusion in the ISO CA 00 01 1013 form, which reads as follows:

“Property damage” to or “covered pollution cost or expense” involving property owned or transported by the “insured” or in the “insured’s” care, custody or control. But this exclusion does not apply to liability assumed under a sidetrack agreement.

Q: Is the adjuster correct?

Response 1: Yes, the adjuster is correct. This is why tenants need a mutual waiver of subrogation in the lease, or the legal liability coverage form (CP 00 40).

Response 2: Is the insured the only tenant in the building? If not, the building is not in the insured’s care, custody or control.

Response 3: Whether the building was in the care, custody or control of the tenant is a determination of fact. Is the insured the only tenant? If so, the entire building is likely in the control of the tenant and subject to the exclusion.

If not, is the portion of the building that sustained damage in the insured’s control—a garage, for example? In this case, too, the exclusion is likely to apply. If the insured backed into a common area over which they have no control, however, the exclusion would likely not apply.

Response 4: We need more information to answer your question. Is the insured the only tenant of the building, or are they one of several tenants? If your insured is the only tenant, and the entire building is totally within the insured tenant’s care, custody or control, I might be able to buy the adjuster’s argument. If not, my answer would likely be different. The provisions of the lease may also come into play.

Response 5: The answer may depend on the terms of the lease agreement, but presumably the tenant does not have care, custody or control of the structure.

Response 6: When you say the insured backed into the building, what is the entity type? Did that entity own the car? Is the insured the only tenant? If not, what part of the building is under their control? What does the lease say? Many factors play into the reality of this claim. Lawyers tend to dwell on small details.

Response 7: Was the auto driver the lessee named in the lease and the exclusive occupant of the building on a triple net lease? If so, the exclusion might apply. Otherwise, it should not, as that auto driver did not have care, custody or control of the property.

This question was originally submitted by an agent through the VU’s Ask an Expert Service, with responses curated from multiple VU faculty members. Answers to other coverage questions are available on the VU website. If you need help accessing the website, request login information.