Author: VU Faculty

The issue of "care, custody and control" in insurance policy exclusions will probably be debated until the end of time. In this article, we'll explore the issue of "CCC" with regard to auto exposures. Our analysis considers the exclusion in the context of an actual claim and presents some possible alternatives for handling such exposures for "non-garage" types of businesses via several policy forms and endorsements.

Here's a question received recently by our "Ask an Expert" service:

"I have a manufacturing client who moves semi-trailers owned by trucking companies away from his dock when they're loaded with his product. He moves them with his tractor truck that is licensed for road use. Recently, a trailer was being moved and the driver did not get the trailer securely attached to the coupling device of the 5th wheel on the tractor. The trailer slipped off the 5th wheel and dropped on the parking lot, turning over and totaling it. Do we have any coverage under the Business Auto?

"We have liability and hired auto physical damage coverage on the BAP  (CA 00 01 07 97). The business auto carrier initially said 'No.' I've turned the claim in to the business auto and CGL carrier. I've talked to adjusters and attorneys who don't have a clear determination of coverage under either policy. What do ya'll think?" [Without revealing names, the agent asking the question is obviously from Tennessee, Mississippi, or Alabama. - Ed. :-)]

While there may be (see below) some basis for coverage if you carefully consider the policy wording, there are probably some things the insured needs to do to ensure coverage in the future. Below are some creative responses from our Commercial Auto faculty on how this exposure might be handled.

Exclusion 6 relates to property in the care, custody and control (CCC) of THE insured. By being singular, it can be argued that the exclusion only applies to the driver. We then jump over to the Conditions, Separation of Insureds, and find that the exclusions are to be applied to each person who qualifies as an insured. The named insured did not have the property in their CCC, therefore obtaining coverage. So, one could argue that the driver is not covered, but the business is.

Sounds like a modified form of Trailer Interchange Coverage would have been needed. The forms generally require a written "Trailer Interchange Agreement." In this case, I don't believe you will find that type of contract in place.

Another angle to try might be to use the DRIVE-AWAY CONTRACTORS CA 20 05 12 93 to provide physical damage for the trailers. Although the ISO rules don't really apply to this type of drive-away (ISO apples to manufacturing drive-aways) I could see an underwriter making an individual risk exception if the premium is commensurate with the risk.

An independent cargo form drafted for shippers of autos and trailers would also be a viable method of coverage. Unfortunately, the unendorsed CGL and BAP are probably not designed to handle this type of exposure.

I think you could use CA 99 54 - COVERED AUTO DESIGNATION SYMBOL, and have the underwriter "make up" a symbol for the trailers in the insured's CCC. This endorsement is real handy for stuff that just doesn't "fit" nicely into some situations.

I think he needs garagekeepers coverage for this exposure. Neither the CGL (which excludes damage to all personal property in the insured's care) nor the BAP (which has a similar exclusion) will cover this damage. The hired car physical damage applies only to vehicles leased, rented, hired or borrowed from another. This trailer appears to be simply a non-owned auto.

Do you have an opinion? If so, send it to the Virtual University and, if you acquiesce, we'll post it here.