Care, Custody and Control Exclusion

I have recently done battle with excess underwriters re the use of the following language instead of the “that particular part” language in exclusion (i) of the CG 00 01

(5) Real property in your care, custody or control;

The underwriters advised this language is necessary as the builder’s risk cover is meant to cover the damage to the entire project and they don’t want act as a “belt and suspenders” gap filler.

As my AGC National Risk Management buddy Jim Trader has pointed out that if the endorsement stands:

“Lots of potential problems (exist) if an owner’s builder’s risk isn’t properly written listing the G.C. and other contractors as insureds and providing waivers of subrogation. Of course, there are some projects (such as additions or remodels) where the potential for loss is substantial even though the project amount is relatively small and no builders risk is obtained or the loss is subject to very large deductibles.”

This issue apparently is not getting much attention as many excess forms have similar language. Such might be marginally acceptable for a sub, but never for a GC. I recognize some courts have held that (i) 5 applies to the total project, but most hold the narrow view that it it only applies to the specific components on which operations are being performed.

Thankfully the underwriter agreed to remove the exclusion in this case.



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Robert G. Mahan personally arranges and manages coverage for commercial property and casualty accounts. Click here for more about Robert's background...

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