One of the most often overlooked, but vital coverages is Bailee’s coverage. Bailee’s coverage is vital for any business that has the property of others in their care, custody or control while preforming work for that customer.
Under a standard general liability policy, customer’s property that is damaged or destroyed while in your care is excluded from the policy. Property insurance doesn’t provide coverage either as the policy isn’t intended to cover property you do not own. For restoration contractors, the only way to obtain coverage for this scenario is to purchase Bailee’s coverage.
What is Bailee’s Customer’s Coverage?
Bailee’s customer’s coverage is insurance protection against legal liability resulting from destruction or damage of a bailor’s (customer or client) property while under the temporary possession of a bailee (business service provider).
In other words, the bailee is the organization or individual that takes temporary custody of someone else’s property, while a bailor is the customer entrusting the bailee with her property. A bailee is tasked with the same responsibility of care as he would if it was his own property.
For example, if a customer entrusts their contractors with the removal and care of property in their home while repairs are preformed, the contractor would be the bailor.
This type of insurance coverage includes property that is on the bailee’s premises or is in transit to or from. Numerous covered perils are typically included in bailee’s customers insurance, include fire, explosion, flood, earthquake, lightening, burglary, theft, robbery, collision, or destruction or damage resulting from transportation.
Coverage commonly excludes damage to property as a result of insects or vermin.
While some businesses try to protect themselves from liability for property of othersby having their customers sign disclaimers of liability, hold harmless agreements or waiver of subrogation contracts, there is a distinction between bailment and contract law. And contracts have seen courts overturn them because a bailee cannot simply contract away her legal liabilities.
If you would like to find out more about bailee’s coverage, including the cost to your company, please feel free to reach out to our office.