Bailee coverage is a type of inland marine coverage that provides liability insurance for another company or person’s items entrusted to you for transportation, storage, or maintenance.
If your business requires you to keep your customer’s goods for a period of time, you’re responsible for those items while they're in your possession. If they were damaged, you could face legal liability for the costs of repairing or replacing those items.
While a general liability policy typically covers damage to someone else’s property, most policies exclude times when you have temporary possession of the items. In insurance terms, this is called care, custody, and control. On the other end of the spectrum, commercial property insurance typically will cover your business’s real estate and any business personal property (BPP) your company owns, such as office supplies, furniture, and any other movable items used by your company.
Bailee insurance fills the gap when your general liability insurance or commercial property insurance isn’t applicable. A bailee policy is a form of inland marine insurance that covers damage or loss of the customer's property if something happens while it’s in your care.
Bailee coverage is best suited for businesses that have possession of their clients’ property – even for a short period of time. Some of the most common industries that could benefit from this liability coverage include:
Computer repair companies. Customers regularly drop off laptops, desktops, servers, and other computer equipment. A drop or other kind of accident could cost you thousands of dollars.
Storage unit property managers. You’re responsible for every item that people lock in your units. If there were a burglary, fire, or flood, you could be held liable for the value of the property that was stolen, damaged, or destroyed.
Trucking companies. Trucking companies move a lot of other people’s property all over the country. A car accident, break-in, or even a poorly loaded truck could lead to major losses for your customers.
Furniture stores. If you provide local delivery services, your customers trust you to deliver their new furniture in perfect condition. If your drivers were to damage the furniture while transporting it or carrying it into the customer’s home, your commercial auto insurance policy would likely not cover it, and you would need to pay to replace or repair the furniture.
Jewelry stores. If a jeweler accidentally damages a customer's watch while repairing it or replacing the battery, it could lead to costly repercussions.
Auto repair shops. Mechanic mistakes, equipment malfunctions, and other accidents could do thousands of dollars in damage to one of your customer’s vehicles. If you don’t have bailee coverage, you may have to pay out of pocket for the repairs and cover a replacement vehicle while the work is being done.
Pet care businesses. If a customer's pet is injured in an accident while under your watch, you may have to pay out of pocket for any medical costs if you do not have bailee coverage.
There are three different types of bailee coverage that account for specific risks and responsibilities. You should pick the coverage that best fits how you handle the property of others.
Unlimited bailee insurance does not require you to provide an accurate estimate of your customer’s property if it’s lost, stolen, or damaged.
If your business involves repairing or servicing items for your customers, you need damage in process bailee, which protects against mistakes made by the repairer to the covered property.
Mysterious disappearance bailee coverage protects you when you lose an item that is in your possession.
If you often have possession of customer property, an Insureon agent can help you explore different bailee coverage options. Insureon helps small business owners compare quotes for commercial insurance with one easy online application. Start an application today to gain financial protection against third-party claims.