Bailee's Customers Insurance

Bailee's customers insurance provides coverage for the legal liability of damage or destruction of a bailor's property while under the care of a bailee. A bailee is a person or organization that has temporary possession of someone else's personal property (dry cleaner, parking valet, jewelers, repairers, etc.)

Bailee's customers insurance provides coverage for property that is on, or in transit to and from, the bailee's premises. Events and perils covered in such policies include fire, lightning, theft, burglary, robbery, explosion, collision, flood, earthquake and damage or destruction in the course of transportation by a carrier. The insurance is in effect when the bailee issues a receipt to the bailor for the item. Coverage excludes property belonging to the insured bailee and loss due to vermin and insects.

If a business regularly takes possession of customer property (holding it in bailment) and is being compensated to do so, the business is responsible for returning the property in the same condition as it was received. When a customer (bailor) takes a dress to the dry cleaner to be cleaned, for example, the dress is temporarily under the control of the bailee (dry cleaner). The bailor expects the dress to be returned in good condition. If the dress is stolen from the cleaner or is damaged while in its care, bailee's customers insurance covers the loss.

A good bailee's insurance policy coverage should include protection from the following perils:

• Water/flood damage
• Burglary
• Wind damage
• Robbery
• Explosion
• Lightning
• Collision

Typical bailee's insurance policies exclude losses stemming from rodents or insects.

Any type of company that regularly stores, repairs or refurbishes customer property should seriously consider adding bailee's customer insurance to their package of business-related insurance coverages. Common types of businesses that hold property in bailment include:

• Jewelers
• Computer repair shops
• Tailors
• Banks (safe deposit boxes are another form of bailment)
• Warehouses
• Storage units
• Auto mechanics
• Restoration and refurbishing companies
• Watch/ and lock repair shops
• Any business offering valet services
• Couriers

Although these types of businesses carry a variety of insurance coverages, only a bailee's policy will protect them from costs stemming from damage to or loss of a customer's property. Other liability insurance policies may cover the business if the item is damaged due to the owner or employee's negligence, but any other event, such as fire, extreme weather or burglary, are exempted from general liability, property and even warehouse insurance policies.