We have a self-storage facility insured under an unendorsed ISO BOP form BP 00 02 01/87 and BP 00 06 01/87. The facility mixed up the storage unit numbers and inadvertently sold off the stored property of the wrong renter. That renter is suing for sold & discarded merchandise of $20,000. Underwriting contends that Liability does not extend due to the Care, Custody & Control exclusion in the Liability form. Further the Property of Others in the Property form limits coverage to $2,500. Claims says they are handling it as Liability due to negligence as the insured does not have ccc, but only has access to the units for emergency or failure to pay rent. Further they do not feel that the $2,500 Property limit applies to a 3rd party claim. Your opinion would be appreciated.

Kentucky Subscriber

This would be considered property damage, defined as loss of use of tangible property, caused by an occurrence, (an accident) which this certainly was.

Property Form

The Property form will cover “Property of others that is in your care, custody, or control; but this property is not covered for more than the amount for which you are legally liable, plus the cost of labor, materials, or services furnished by you on personal property of others.”

Determining whether or not the insured has care, custody or control over the property in question depends on the facts. If the insured does not have access to the locker (example: via key) I would agree with the statement from claims that there is no care custody and control over the possessions, so long as the contract between the insured and the tenant that specifically states that the insured is not responsible for any damage to the tenant's goods.  No care, custody, or control means no coverage.

If the insured does have a key or another way to access the locker in question, then the property of the tenant would be in the insureds care, custody and control and under the Property form, coverage for the tenant's property would be covered to the amount the insured is legally liable.

The $2,500 limit in the Property form is for loss or damage by theft and applies in 3 categories (1) furs, (2) jewelry, and (3) patterns, dies, molds, and forms. (Unless the $2,500 is the limit listed in the declarations for Personal Property of Others?)

The property form also states that

“6. Loss Payment.

In the event of loss or damage covered by this policy:

D. We will determine the value of Covered Property as follows. . .

(3) The following property at actual cash value

(b) Property of Others

E. Our payment for loss of or damage to personal property of others will only be for the account of the owners of the property. We may adjust losses with the owners of lost or damage property if other than you.

If we pay the owners, such payments will satisfy your claims against us for the owners' property. We will not pay the owners more than their financial interest in the covered property.”

This would suggest that the insurer would deal directly with the tenants and would pay the financial interest in the covered property to the tenants.

Liability form

The Liability form has an exclusion for personal property that is in the care, custody, or control of the insured. So according to the Liability form, if the insured has a key or other way to access the property, they are in the care, custody, or control of the personal property and there is no coverage, while if there is no other access to the property then it would not be in their care, custody or control and thus the exclusion would not apply.