As a business owner in India, you must appreciate the importance of safeguarding your operations from various risks. A Commercial General Liability (CGL) policy is a cornerstone of this protection, covering you for third-party bodily injury and property damage.
However, you might encounter specific situations where your standard CGL policy may not offer coverage, particularly when you are temporarily responsible for someone else's property. This is where the care, custody and control insurance and its endorsement come into play, offering a crucial layer of protection.
What is care, custody and control?
The concept of care, custody and control refers to property that is in your physical possession or under your direct supervision, even if you do not own it. Standard CGL insurance typically excludes coverage for damage to such property, meaning:
- Property you are physically holding, transporting, or actively working on.
- It implies that you, as the temporary custodian, have a heightened level of responsibility.
- Damage to this type of property is typically not covered under a basic CGL policy.
- Consider a mechanic: the client's vehicle in their garage is under their care, custody and control.
How does care, custody and control endorsement work?
To take care of this gap in the coverage, you may add a care, custody and control insurance endorsement to your commercial general liability policy. This endorsement helps in the following ways:
- Adjusts your standard policy specifically to include this critical coverage.
- It covers damage to property while in your temporary possession, especially if it is due to negligence.
- Becomes essential for businesses that regularly handle assets owned by their clients.
- Offers a crucial protection layer for your business operations and peace of mind.
Which situations require care, custody and control endorsement?
Several types of businesses find this endorsement essential for comprehensive coverage. These are:
- Repair shops: Garages, electronics repair shops and appliance repair services all take customer items into their care, custody and control.
- Storage facilities: Businesses that provide temporary storage for goods or vehicles would benefit from this endorsement if the stored items are damaged.
- Cleaning services: If a cleaning service damages furniture or expensive items while cleaning a client's premises, the endorsement could provide coverage.
- Logistics and transportation companies: While specific motor transit policies exist, for certain short-term handling or incidental storage, this endorsement can be valuable.
- Event management companies: When managing an event, you might have temporary control over rented equipment or client property.
It is important to remember that this endorsement is not the same as professional liability insurance, which covers financial losses due to errors or omissions in professional services. The care and custody insurance endorsement specifically addresses physical damage to property under your temporary supervision.
Conclusion
Understanding the care, custody and control exclusion in your CGL policy and considering the relevant endorsement can significantly strengthen your business's insurance coverage. It helps you avoid unexpected financial burdens if client property is damaged while it is under your temporary charge.
Disclaimer: The information provided in this blog is for educational and informational purposes only. It is advised to verify the currency and relevance of the data and information before taking any major steps. Please read the sales brochure / policy wordings carefully for detailed information about on risk factors, terms, conditions and exclusions. ICICI Lombard is not liable for any inaccuracies or consequences resulting from the use of this outdated information.