Bailee Coverage, Who Needs it?

By: Gerlie Ryan, Capstone Commercial Lines Account Manager

I dropped my clothes off today to the dry cleaner and I was a little nervous. It was my favorite suit, you know the one you wear when you need that extra ounce of courage, or you really want to land the big client. Everyone has special attire that is more than just fabric. Perhaps there are memories attached to the clothing or maybe you just paid a lot of money for something and really would hate to have it ruined. When you drop off clothes to a cleaner what happens if something destroys or damages your property while in their care?

Businesses are required to have several different types of insurance policies such as Workers Compensation, General Liability, Property, etc. The requirements are unique, depending on the company’s risk. Surprisingly, none of these policies will actually cover your personal property that is left in the care of a business. So how can you ensure your items will be safe? Well, you can’t really but you can ask what their policy is if something is damaged. You could even ask if they have Bailee Coverage.

Bailee Coverage is insurance coverage for legal liability resulting from damage or destruction of a bailor’s property while temporarily under the care or custody of a bailee. A bailee is a person or organization that has temporary possession of someone else’s personal property. Some examples of a Bailee would be, dry cleaner, parking valet, jeweler, etc.

Now if you own a business you may be thinking contents coverage on your commercial insurance policy will cover customer’s property. This is not the case; in fact contents coverage ONLY covers your property. There is actually an exclusion for other people’s property under the General Liability portion of your commercial insurance. So, Bailee Coverage is especially important for cleaners, warehouses, hospitality industry, and people who repair property of others. If your business stores, repairs or services property that belongs to someone else, your property insurance will not cover these items. This is where having Bailee Coverage can help to protect your client’s property.

A bailee policy covers damage, loss and destruction to others property as a result of fire, theft, burglary, explosions, leaks, earthquakes, weather related events, and damage caused during transportation. This is not an all-inclusive list, check your policy for a full list of covered events.

There are different levels of bailee coverage as well:

Unlimited Bailee: With this coverage, you do not have to provide an accurate estimate of your customers’ property. This will cover you regardless of the value, and is a good idea to get if you are unable to estimate accurately. It will protect you if you underestimate the value of the property.

Damage in Process: This will cover your clients’ property in the event someone makes a mistake when repairing or servicing their property. For example, if your employee stores a client’s goods at the wrong temperature and they are damaged because of this, insurance would cover you.

Mysterious Disappearance: If you misplace your client’s property, this insurance would cover you.

There is also optional bailee coverage that allows a business to tailor their specific needs with a form of a la carte additions to the standard bailee coverage.

Next time I will have to ask my cleaner what their policy is if something is damaged while in their care. For now I have to just hope nothing will happen to my special suit, I have a big meeting on Friday.