Care, Custody and Control (Processing) Clause

Purpose

Under AHB clause 7.7, claims for damage to third-party property are excluded where the damage results from the policyholder’s own business activity performed on that very property – such as processing, repair, transport or inspection – or where the property was used as a tool or aid in carrying out that activity. The exclusion therefore targets objects within the immediate sphere of the activity, reflecting the view that such exposure sits closer to an uninsurable performance risk than a typical third-party claim.

Effect and limits

Under the note to clauses 7.6 and 7.7, the exclusion also extends to acts of the policyholder’s employees and agents. A carve-back applies where the policyholder proves that obviously necessary protective measures had been taken. Because the exclusion touches core activity exposures for many trades and service businesses, it is routinely bought back through a separate care, custody and control clause with its own limit and deductible.

Negotiation and practice

The buy-back is market-standard but negotiated as to limit, deductible and scope for immovable property. Trades, logistics and inspection businesses should check whether the agreed clause also covers damage to parts of immovable property directly affected by the activity, and whether employee acts are expressly included.