If you are in the business of storing another’s goods, such as owning a shipping yard, you are what is called a “bailee.” Because you have agreed to house goods until they leave your possession, you have agreed to accept responsibility for these goods. It is important you work with bailee liability insurance brokers who are experts in additional coverage you will need in the event something happens to the cargo while it rests in your hands. This is true even if you are dealing with smaller items, such as the clothing in your care if you are a dry cleaner.
Should the goods be damaged in any way, either by your transit of them to and from your storage facility, your handling of them when loading and unloading, a natural event, fire, theft or other disaster, your liability goes beyond the cost of the lost items. Should the disaster occur on your property, you may be responsible for the clean up involved, even though the goods are not technically yours. Should you be sued or have a claim filed against you for the loss, your defense costs might skyrocket beyond your financial means. Bailee liability insurance brokers can secure an extended liability policy to cover the damages and these overhead costs.
Companies who hold property for a client for any amount of time are automatically entered into a bailment relationship. The owner of the property is considered the bailor, while the person holding the property is considered the bailey. When this relationship occurs, it is vital not only to have insurance against damage, but also to have proper bailee coverage.
To understand more about the bailment relationship, it is important to understand the type of business carriers there are to determine what type of coverage is needed. There are private carriers and common carriers. Private carriers have the right to refuse to enter into a bailment relationship and can give stricter limitations on culpability and the amount of coverage they offer. In addition, handling of property or goods may not be the primary function of the business.
Common carriers, on the other hand, have much less control over their bailee coverage as they are highly susceptible to culpability of damage. It is prudent to point out that the common carriers primary role of the business revolves around bailment. This culpability is increased because the bailor generally keeps property in its possession until the transaction is complete.
After understanding the crucial differences between the types of businesses that may carry bailment clauses, it is important to have the proper amount of insurance. Bailee coverage is easy to obtain, but difficult to live without, so companies that need insurance should look for appropriate coverage.