Boundaries of 'care, custody and control'
Coverage Q&A: A gym member had his property and vehicle stolen while exercising at the insured's fitness facility.
Analysis brought to you by FC&S Expert Coverage Interpretation, the recognized authority on insurance coverage interpretation and analysis for the P&C industry. To find out more — or to learn how to find answers to YOUR coverage questions — click here!
Question: This claim arose when the claimant, a member of the insured’s fitness facility in Las Vegas, was followed into the facility by an unknown person. The insured employee, who attends the front desk, stepped away from the front desk at the time the claimant and unknown person entered the facility. The unknown person did not have a membership.
The claimant locked his personal property in a locker with his own padlock and went to exercise. While the claimant was exercising, the unknown culprit broke the padlock and stole the contents of the claimant’s locker. The contents of the locker included a wallet, a debit card, Nevada driver’s license, Social Security card, $800 in cash, a flip phone, the claimant’s change of clothes, and the claimant’s car keys. The unknown culprit, using the stolen car keys, stole the claimant’s car from the parking lot. Within the claimant’s vehicle was an Apple computer that was also stolen. The vehicle was eventually recovered by the police, but none of the personal property was, and the vehicle had sustained physical damage.
The claimant was partially indemnified through his personal auto and homeowners insurance carrier that is pursuing a subrogation claim. The claimant maintains the insured was negligent as their employee left the front desk at the main entrance unattended. The culprit who stole the claimant’s personal property was never identified, but it is assumed it was the person who followed the claimant into the facility.
At issue is the exclusion j. Damage to Property, which reads in part: “Property damage to: (4) Personal property in the care, custody or control of the insured.”
The definition of property damage reads in part: “a. Physical injury to tangible property, including all resulting loss of use of that property. All such loss of use shall be deemed to occur at the time of the physical injury that caused it; or b. Loss of use of tangible property that is not physically injured. All such loss of use shall be deemed to occur at the time of the “occurrence” that caused it.”
All of the claimant’s stolen personal property sustained property damage. At issue is if the personal property in the locker and the vehicle that was stolen as a result of the stolen keys are considered in the care, custody or control of the insured.
A court case Liberty Mut. Ins. Co. v. Zurich Ins. Co. has similar facts. In the court case, the exclusion j. 4. was upheld when the claimant’s jewelry was stolen from a room safe inside their hotel room. The jewelry, in a room safe provided by the hotel, was still considered to be in the care, custody or control of the hotel.
We are seeking input from the experts at FC&S regarding the applicability of the exclusion j. 4. to the loss of the personal property stolen from a locker and the parking lot of the insured’s fitness facility.
— New Jersey Subscriber
Answer: Your analysis is correct that the claimant’s personal property was within the care, custody or control of the insured, and as such, the property damage should be covered. However, the claimant’s vehicle is not covered by the property policy. Just because a vehicle is parked in the parking lot of the insured does not mean that it is in the care, custody, or control of the insured, as the insured does not possess the key or title, and the vehicle was not left in the insured’s care.
Related: