Bailee Insurance Coverage Provides Value to Many Industries
Posted by: Banitech Insurance | on July 4, 2016
When you take charge of storing or handling goods without issuing a document that defines your bailee liability, you have set yourself up for a potential exposure to full value liability for any cargo loss or damage. Since this liability is not limited, bailee insurance coverage is required. The policy responds to any physical loss or damage of property while in your care, custody or control, without regard of negligence.
Bailee coverage is important to have when an item is lost or damaged and the bailee needs to make reparations. For example, if a customer entrusts a product, or several, to you and those items end up lost or damaged during transit, in whole or in part, the policy will pay for any losses.
Bailee Insurance coverage is a major plus
When purchasing a Bailee insurance policy, be sure to work with a professional that specializes in this type of coverage. Its important to note that not all policies provide the same coverage. For example, defense costs must be taken into account since this is often a substantial expense incurred by a bailee when presented with a claim for loss or damage.
This can quite easily exceed the monetary amount of damages awarded. Speak to an advisor familiar with this policy, someone willing to review your policy and determine whether defense costs are included as part of your coverage and up to what amounts.
Also, as a bailee you may be responsible for issues such as debris removal, which is essentially the cost to have damaged property contained and removed from the premises and properly disposed of. Your agent should review this with you to determine what you currently have and what may be needed to be included in your insurance program.
Liability of bailees
When a bailment involves the transfer of property where no compensation is involved, its referred to as a gratuitous bailment. If, for example, you’re temporarily storing property belonging to your customers in a neighboring store or warehouse and the bailment is to the mutual benefit of both parties, the bailee is referred to as a bailee for hire, which is considered a commercial bailment agreement.
The degree of care required in a commercial bailment requires the bailee to use only the degree of care that an ordinarily prudent person would use in handling his or her own property. For this reason, bailee insurance coverage is the best solution when you are entrusted with the care of items belonging to others.