A buffer meets a fender at 2am. Who pays?

The sentence that decides it

The industry-standard Commercial General Liability form is ISO CG 00 01. Under Coverage A, the "Damage to Property" exclusion at paragraph j., subparagraph (4), removes cover for property damage to:

"Personal property in the care, custody or control of the insured"

ISO Commercial General Liability Coverage Form CG 00 01 (Ed. 04 13), Coverage A, Exclusion j.(4)

A vehicle is personal property. A crew alone in your building overnight, holding your keys and your alarm code, is about as clean an example of care, custody and control as the drafters could have imagined.

The exceptions that follow exclusion j. do not rescue anyone here. They apply to damage to premises — the building itself, and only where the contractor was a tenant. They do not reach a customer's car or a unit of new inventory sitting on the showroom floor.

Two more exclusions on the same page

The floor being worked on is excluded too. Exclusion j.(5) removes cover for damage to "that particular part of real property" on which the contractor is performing operations. Burn a showroom floor with a rotary machine and the burned floor is the one thing the policy will not pay for.

And the crew member is not an insured at all. Section II of the same form says employees are not insureds for property damage to property "rented to, in the care, custody or control of, or over which physical control is being exercised for any purpose by" them. The person actually holding the machine has no personal cover for the thing they were holding it against.

What courts actually do with it

"Care, custody or control" is not defined in the policy, so it is decided case by case. The Supreme Court of Arkansas put it plainly: the phrase "should be applied with common sense and practicality." That cuts both ways, and two decisions matter for overnight cleaning:

• Being absent does not defeat control. In Essex Ins. Co. v. Soy City Sock Co., 503 F. Supp. 2d 1068 (C.D. Ill. 2007), the court applied a two-part test turning on whether the property was within the insured's possessory control and whether exercising control was a necessary element of the work. Nobody being there at 3am does not mean nobody had control.
• A key plus a duty to look after it is enough. In New Hampshire Ins. Co. v. Adellera, 450 P.2d 668 (Wash. 1972), a car was stored free of charge in a locked garage and the exclusion applied — no fee, no contract, just possession and an understanding that it would be kept safe. A cleaning contract is a great deal more than that.

These are real decisions in particular states on particular facts, and yours may come out differently. The point is not that the exclusion always bites. It is that no dealer should assume it never does.

You cannot simply buy it back

The obvious move — ask for an endorsement deleting the exclusion — mostly does not exist. As one long-standing industry commentary puts it, endorsements to alter the care, custody and control exclusion have been developed over many decades, and a general liability policy is still not the place this exposure is meant to sit.

Where it does sit is a different form entirely: a legal liability form, which responds where the damage was caused by the insured's failure to exercise proper care, or an inland marine bailee-type policy. Different form, separate limit, separate premium. A contractor who tells you "we're fully insured" without naming which of those they carry has answered a different question from the one you asked.

And garagekeepers is probably not the answer either

Garagekeepers coverage is written for auto and trailer dealers — it covers customers' vehicles left in the dealer's care, particularly where there is a service department or body shop. It is your coverage, not your cleaner's, and it insures customers' cars rather than your own inventory.

Which produces an uncomfortable gap worth naming out loud: a crew damages a new unit on the showroom floor, their CGL excludes it, their employee is not an insured for it, your garagekeepers form is about customers' vehicles, and you are left arguing with your own property insurer over your own deductible.

What to ask any bidder — and what a good answer sounds like

1. "How is damage to our vehicles covered, and on which form?" A good answer names a specific policy other than the CGL. "We have a million in general liability" is not an answer to this question.
2. "What is the limit per vehicle and in the aggregate?" One unit of inventory can exceed a small sublimit on its own.
3. "Show me the certificate, and let me call the carrier." Certificates are easy to produce and easy to fake. We verify our partner contractors' cover with the carrier directly and we expect you to do the same to us.
4. "Who holds keys and codes, how are they issued, and what happens when someone leaves?" Key control should be a documented process with named holders, not a hook in the supervisor's van.
5. "Will your crew move vehicles?" Ours will not, and the contract says so. The moment a cleaner drives a unit you have created an auto exposure nobody priced and probably nobody covered.

What we do about it

We carry cover for damage to property in our care as a named, separate item rather than assuming a general liability policy will stretch to it, and we will tell you the form and the limit before you ask. Our crews do not move vehicles. Keys and codes are issued to named people and returned on separation, in writing. Where the work is delivered by a partner contractor we verify their insurance with the carrier rather than accepting a certificate, and we tell you it is a partner before you sign.