Restoration Insurance: Rekeying New Locks

We just came across a strange claim that involved a restoration contractor we felt was worth sharing: a restoration contractor was working at an apartment building and one the employees had a master key set that went to several apartments at the complex. One afternoon when he left for lunch and accidentally left the keys on his ladder; when he returned the keys had been stolen. When he reported the loss, the apartment complex had to replace all of the locks that could be accessed by the stolen keys.

So the question is whether or not a general liability policy will provide coverage for a claim like the scenario above. Part of the issue is because there is not actual physical damage to the locks. However, what most people don’t realize is that the definition of property damage within a general liability policy includes loss of use of tangible property that is not physically injured. So a standard general liability policy would actually pay to have all of the doors locks replaced.

The next part in question would be for the payment for replacement keys for all of the new locks. In the scenario above, a general liability would most likely not provide payment for the new keys. A general liability policy has an exclusion for personal property in the care, custody, and control of the insured. Since the keys were in the possession of the restoration employee, the policy would not provide the coverage.

Please keep in mind that every insurance policy is different. You should talk to your agent about your specific policy, its endorsements, and exclusions to ensure your company would be covered by the scenario above.