{"id":896046,"date":"2019-06-20T14:09:33","date_gmt":"2019-06-20T20:09:33","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=896046"},"modified":"2019-06-20T14:09:40","modified_gmt":"2019-06-20T20:09:40","slug":"limited-scope-care-custody-control-exclusion","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/limited-scope-care-custody-control-exclusion\/","title":{"rendered":"The Limited Scope of the \u201cCare, Custody or Control\u201d Exclusion"},"content":{"rendered":"\n<p>Kirk Pasich | <a href=\"https:\/\/www.lexology.com\/library\/detail.aspx?g=cea96b9c-b0dd-4211-80a3-740a570626f6&amp;utm_source=Lexology+Daily+Newsfeed&amp;utm_medium=HTML+email+-+Body+-+General+section&amp;utm_campaign=Lexology+subscriber+daily+feed&amp;utm_content=Lexology+Daily+Newsfeed+2019-06-11&amp;utm_term=\">Pasich LLP<\/a> | June 10, 2019<\/p>\n\n\n\n<p>General liability policies have long contained an exclusion for property \u201cin the care, custody or control of the insured . . . .\u201d Commercial General Liability Coverage Form, \u00a7 I., Coverage A, \u00b6 2.J.(4) (Insurance Services Office, Inc. 2012). The scope of this exclusion has been the subject of various court decisions over the last 60 years. However, on June 5, 2019, a California court of appeal rendered a decision confirming the narrow scope of this exclusion.&nbsp;&nbsp;<\/p>\n\n\n\n<p>In&nbsp;<em>McMillin Homes Construction, Inc. v. National Fire &amp; Marine Insurance Co.,<\/em>&nbsp;2019 WL 2366468 (Cal. Ct. App. June 5, 2019), a general contractor was an additional insured on a general liability policy issued to a subcontractor. The insurer refused to defend the general contractor in a suit brought by homeowners for construction defects relating to work performed by the subcontractor. It argued, among other things, that its \u201ccare, custody or control: exclusion applied because the worksite was within the contractor\u2019s control. The court disagreed.&nbsp;&nbsp;<\/p>\n\n\n\n<p>The court considered various earlier decisions. In doing so, it cited&nbsp;<em>Home Indemnity Co. v. Leo L. Davis, Inc.,&nbsp;<\/em>79 Cal. App. 3d 863, 870-71 (1978), noting, \u201c\u2018Almost invariably where coverage is denied, physical control by the insured has been exclusive, even if such exclusivity was only momentary, so long as the damage occurred in that moment.\u2019\u201d&nbsp;<em>Id<\/em>. The court followed this rule, noting that the subcontractor \u201cwas responsible for controlling its jobsite and supervising the roofing work,\u201d but the general contractor \u201cwas responsible for the whole project and coordinating schedules to ensure the project finished on time.\u201d&nbsp;<em>McMillin<\/em>, at *8.&nbsp;<\/p>\n\n\n\n<p>Although the court found the exclusion to be unambiguous, it then addressed the interpretation of the exclusion assuming that it was ambiguous. Once again, it rejected&nbsp;the insurer\u2019s argument. It noted that because construction defect litigation \u201c\u2018is typically complex and expensive, a key motivation in procuring an additional insured endorsement is to offset the cost of defending lawsuits where the general contractor\u2019s liability is claimed to be derivative.\u2019\u201d&nbsp;<em>Id<\/em>. Therefore, the court concluded that reading the \u201ccare, custody or control\u201d exclusion \u201cin a manner that nullifies the broad coverage provision for a general contractor sued for construction defects is not consistent with an insured\u2019s objectively reasonable expectations.\u201d&nbsp;<em>Id<\/em>. at *9. It emphasized that the insurer\u2019s construction \u201cbears little connection to the risk involved or the reason for a general contractor to seek coverage as an additional insured. Its stance might be \u2018reasonable in the abstract,\u2019 but it is inconsistent with the basic rule that limitations on a promised defense duty must be conspicuous, plain, and clear.\u201d&nbsp;<em>Id<\/em>.&nbsp;<\/p>\n\n\n\n<p><em>McMillin&nbsp;<\/em>stands as a clear statement that an \u201cadditional insured\u2019s mere status as a general contractor\u2014with overall responsibility for and nominal control of the entire project\u2014does not meet [the] standard\u201d of \u201c<em>exclusive or complete control\u201d<\/em>&nbsp;sufficient to trigger application of the \u201ccare, custody or control\u201d exclusion.&nbsp;<em>Id<\/em>. at *5.&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Kirk Pasich | Pasich LLP | June 10, 2019 General liability policies have long contained an exclusion for property \u201cin the care, custody or control of the insured . . . .\u201d Commercial General Liability Coverage Form, \u00a7 I., Coverage A, \u00b6 2.J.(4) (Insurance Services Office, Inc. 2012). The scope of this exclusion has been&hellip; <a class=\"more-link\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/limited-scope-care-custody-control-exclusion\/\">Continue reading <span class=\"screen-reader-text\">The Limited Scope of the \u201cCare, Custody or Control\u201d Exclusion<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[30],"tags":[9895,10842,4739],"class_list":["post-896046","post","type-post","status-publish","format-standard","hentry","category-general-liability-policy","tag-advise-consult","tag-care-custody-or-control-exclusion","tag-commercial-general-liability-policy","entry"],"jetpack_publicize_connections":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>The Limited Scope of the \u201cCare, Custody or Control\u201d Exclusion - Advise &amp; 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