Personal property covered by insurance despite “care, custody, or
control” exclusion provision
The president and owner of a construction company used the company to
build his house. But since the company did not have "care, custody,
or control" of the president's personal property inside,
the insurance company could not escape coverage.
By Joe Forward, Legal Writer,
State Bar of Wisconsin
Sept. 22, 2010 – A
Wisconsin appeals court recently held that an insurance policy provision
that excluded coverage for personal property in the “care,
custody, or control” of the insured precluded coverage of a
house burned by fire, but not the personal property inside.
James Accola, owner and president of Fontana Builder’s Inc.
(Fontana), used his company as general contractor to build his own
house. Accola moved in with his family before it was finished. When fire
broke out and destroyed the house one night, Fontana still owned the
house, but Accola legally occupied it under a temporary occupancy
Fontana carried an insurance policy with Westfield Insurance Co. The
policy excluded coverage of property “owned” by Fontana.
Since Fontana owned the house, the house was not covered. The policy
also excluded coverage of personal property in Fontana’s
“care, custody or control.”
Accola claimed his personal property inside the house was covered
because Fontana did not own the personal property, and it was not in
Fontana’s “care, custody, or control.”
v. Fontana Builder’s Inc., 2009AP2810 (Sept. 22, 2010),
the appeals court ruled that summary judgment was not appropriate where
Westfield could not show that the Accolas’ personal property was
“necessary to the work being done by Fontana.”
Two elements of care, custody, or control
Westfield argued the “care, custody, or control” exclusion
provision was in place to avoid coverage in situations where an insured
(here, Fontana) allows valuable property to be stored on its property
while work continues. Fontana, Westfield argued, allowed Accola to store
his valuable personal property on Fontana’s property when the
house was not finished.
Noting that “care, custody, or control” clauses are
ambiguous, the court held that under Silverton Enters., Inc. v.
General Cas. Co. of Wis., 143 Wis. 2d 661, 422 N.W.2d 154 (Ct. App.
1988), property is in the “care, custody, or control” of the
insured if it is under the supervision of the insured and “it is a
necessary element of the work involved.”
Westfield argued that the “supervision” element of
Silverton is automatically necessary to the work involved, and Accola,
as owner and president of Fontana, had close supervision of his own
personal property. The appeals court disagreed.
“To state that because Accola had close supervision of his own
personal property, the supervision ipso facto was necessary to the work
being done subsumes the necessity element into the supervision element
of the test,” the court wrote.
Under Silverton, the court explained, “we cannot see how
the Accolas’ personal property was necessary to the work involved
in finishing – or, for that matter, building – their
However, the appeals court noted that Accola’s supervision of the
property “may well be relevant to the merits of [a] potential
negligence claim.” Allegedly, a Fontana employee caused the fire
by leaving flammable rags in the house.
The court also discussed Meiser v. Aetna Cas. & Sur. Co.,
8 Wis. 2d 233, 98 N.W.2d 919 (1959). In Meiser, the court held
that damaged windows were not in the “care, custody, or
control” of a subcontractor who scratched them because they were
not necessary for plastering walls.
The court refused to inject a Meiser implication that the
windows, damaged by the subcontracting wall plasterer, were in the
“care, custody, or control” of the general contractor.
“[T]here is a big difference between saying that the windows of a
house are a necessary element of the work involved in building a house,
and saying that the personal property of the future owner of a house is
a necessary element of the work involved in finishing its
construction,” the court wrote in a footnote.
Finally, because Westfield failed to brief the issue, the appeals court
did not consider a “hybrid corporate piercing the veil”
issue presented by the possibility of treating Fontana and Accola, as
its owner and president, as “one and the same” for purposes
of “care, custody, or control.”
The appeals court reversed the Walworth County Circuit Court’s
summary judgment in favor of Westfield, and remanded for further