Another of the business risk exclusions is J.4, which excludes coverage for property damage to personal property in the insured’s “care, custody, or control.”
You might think that this is really important for businesses that need to borrow or rent equipment. You would be correct. All other things being equal (which may be a poor assumption – always know what’s in a policy’s endorsements), J.4 would bar coverage if a claim was made against the insured for damage to equipment, or other property, that it borrowed or rented.
But, the reach of J.4 is much further. I have seen this applied in cases where a hotel lost the belongings of a guest, for example. J.4 could apply to property that the insured was hired to repair, and it would apply whether the insured actively (though unintentionally) damaged the property, or if the property was otherwise damaged while the insured had it.
The first time I recall considering application of J.4 was actually about railcars. The insured had rented railcars to transport its product. The owner of the railcars claimed that the product had damaged the inside of the railcars. My issue was whether the railcars — albeit operated by a third party — might have been in the insured’s “care” or “control” while being used to transport the insured’s product.
How would you have come out?