Legal Definitions - owned-property exclusion

The owned-property exclusion is a standard clause found in many liability insurance policies. It specifies that the policy will not cover damage to property that is owned by, rented to, or otherwise in the care, custody, or control of the insured party. In essence, your liability insurance is designed to protect you financially when you cause damage to someone else's property, not your own. If you accidentally damage property that belongs to you, this exclusion means your liability policy will not pay for the repairs or replacement of that property.

Here are some examples to illustrate how the owned-property exclusion works:

• Example 1: Construction Company Damaging Its Own Building

  A construction company is using heavy machinery to demolish an old structure on a site adjacent to its own corporate office building. Due to an operational error, a piece of equipment swings unexpectedly and crashes into the company's *own* office building, causing significant structural damage to a wall and several windows.

  How it illustrates the term: The construction company's general liability insurance policy would likely contain an owned-property exclusion. This means that while the policy might cover damage to a *neighboring* building if the equipment had hit it, it would not cover the damage to the construction company's *own* office building. The company would need a separate commercial property insurance policy for its own buildings to cover such damage.

• Example 2: Homeowner Damaging Their Own Fixtures

  A homeowner is attempting to install a new ceiling fan in their living room. While working, they accidentally drop the heavy fan unit, causing it to crash onto their newly installed hardwood floor, leaving a large dent and several deep scratches.

  How it illustrates the term: The homeowner's personal liability coverage, typically part of a homeowner's insurance policy, is designed to cover damage they might accidentally cause to someone else's property (e.g., if the fan fell on a visitor's antique table). However, the owned-property exclusion would prevent their liability coverage from paying for the repair or replacement of their *own* damaged hardwood floor. The damage to their own home would typically fall under the property coverage section of their homeowner's policy, subject to its own terms and deductible.

• Example 3: Restaurant Manager Damaging Restaurant Equipment

  The manager of a restaurant is attempting to fix a clogged drain in the kitchen. In the process, they accidentally use the wrong chemical, which corrodes a vital component of the restaurant's *own* industrial dishwasher, rendering it inoperable.

  How it illustrates the term: The restaurant's general liability insurance policy would likely include an owned-property exclusion. Even though the manager caused the damage, because the dishwasher is *owned* by the insured restaurant, their liability policy would not cover the cost of repairing or replacing the damaged equipment. The restaurant would need a separate commercial property or equipment breakdown insurance policy to cover damage to its own assets.