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.More