Your clients put their trust in your company every time they place their property in your possession. This kind of transaction is called a bailment because you receive compensation in exchange for the services you provide. You are also responsible for returning the property in the same condition as you received it.
You need bailee coverage since you are liable for any costs associated with repairing or replacing the property if it becomes lost, stolen or damaged. Any company that regularly stores, repairs or refurbishes property belonging to its customers should carefully consider adding bailee’s coverage to their insurance package.
In a typical bailment situation, the person who owns the personal property or has legal title to it is referred to as the bailor, while the one who has temporary possession is the bailee. In the business world, these bailments will likely be for the mutual benefit of both parties. When you consider the types of businesses involved in bailments, such as for leasing or safekeeping, or when providing cleaning, repairing or servicing of personal property, they’ll need coverage to protect the interests of all parties involved.
Bailee coverage provides specific protection
When an item of value is lost or stolen while in your custody or control you face an expensive risk exposure that is almost always excluded from your general liability insurance policy. As another example, a fire occurring in a warehouse you own where you keep property belonging to customers could wipe out everything, with cumulative losses of anywhere from several hundred thousand dollars to well over a million.
While your policy for property insurance will help you replace any equipment and/or buildings damaged by the blaze, it will not come to your aid regarding the personal property of others and your customers will expect you to replace their ruined belongings. This is where having a bailee’s insurance policy can come into play.
Along with theft and fire protection, a bailee’s insurance policy coverage can also include protection from water or flood damage, burglary or robbery, wind damage, explosion, lightning, and collision.
A typical bailee’s insurance policy excludes losses stemming from rodents or insects, so keeping trucks and warehouses free of infestation is vitally important. Speak to an agent about bailee coverage and why you may benefit by purchasing this policy.