presenting an insurance form to sign

Protecting Customers’ Personal Property: All About Bailee Insurance

Did you know that 11% of loads arriving at a distribution center have some level of damage? If you are transporting valuable property like artwork or electronics, your business is at risk for financial losses if the property gets damaged while stored or during transportation.

Bailees insurance can protect your customer’s personal property while it’s at your warehouse or being transported.

Bailees insurance is not a term you hear often, so it can be confusing. We have a full guide on bailees insurance to help answer all your questions on bailee insurance coverage or inland marine insurance. Keep on reading to learn more.

What is Bailees Insurance?

Bailees insurance or inland marine insurance is for businesses that take temporary ownership of a customer’s property. It protects the customer’s property from damage while on the premises, in storage, or transit. Bailees coverage or inland marine coverage protects you from any damage resulting from unexpected events like fires, floods, earthquakes, or damage during transportation.

When a customer’s property gets damaged, they may sue you for damages. You will then have to deal with legal costs and even the cost of replacing the item. This can be quite significant, especially if more than one customer has damaged property because of a fire at your business’ premises.

Who Does Bailees Insurance Apply To?

Inland marine insurance applies to products, materials, or equipment that’s transported or temporarily stored in a warehouse. Warehouse and distributions should consider getting bailee insurance to protect themselves from financial losses from collision or cargo theft.

You should know that bailees coverage or inland marine coverage is not just limited to transportation companies. Any company that takes temporary ownership of products should consider bailees insurance. This includes:

  • Repair shops, including auto repair
  • Dry cleaners
  • Jewelry shops
  • Restaurants with valet service
  • Banks that have safety deposit boxes
  • Storage unit facilities

A storage unit can hold a lot of valuable items, so customers will sue the business if it gets lost or damaged. Sometimes even the most innocuous items can be worth thousands and can end up costing your business a significant amount of revenue. In July 2021, thieves broke into a New Jersey storage facility and stole $50,000 worth of off-road vehicles.

All these businesses take temporary ownership of valuable goods. If the customer’s personal property gets damaged or stolen, the business could be liable for thousands of dollars. With bailees insurance coverage, your business will be protected in these situations.

What is Bailee Coverage?

Commercial property insurance covers the physical assets and personal property of the business, such as the cost of damage to any inventory or office equipment of the business. However, any customer property would not be covered.

Bailees insurance coverage is typically added to your commercial property insurance.

It’s especially important to have bailee coverage when you’re dealing with or shipping high-value items like electronics, communications equipment, construction equipment, or medical equipment. Jewelry stores often take in items to repair, including valuable family heirlooms. Safety deposit boxes and storage units can include thousands of dollars worth of designer bags or off-road vehicles that are at higher risk of theft.

Unlimited Coverage

Unlimited coverage is the most comprehensive and will cover any amount of damages. In most cases, insurance companies will ask you how much coverage you want. With unlimited coverage, there is no maximum.

This will cause higher premiums because the insurance company has to cover significant financial losses, but it’s a beneficial coverage for companies who are dealing with major valuables.

Damage In Process Coverage

This type of coverage protects your business if you damage a product during the repair process. It’s valuable coverage for repair shops but is not covered automatically in bailees insurance policies. You may need to add it separately.

Mysterious Disappearance Coverage

This type of coverage protects you if you lose the customer’s property. These are cases where their items are not stolen, but are mysteriously gone. This is not covered under general bailees insurance, but if it’s a concern for your business, you can add it by paying extra premiums.

It’s probably best for a volume business like a dry cleaner, where items can go missing often.

What To Look For In a Bailees Insurance Company?

You want to make sure you understand the exact nature of the coverage. If you are paying a lower premium, there may be a reason for that. It could mean a higher deductible or that you’re only covered for a portion of the damages. You should also understand all the exclusions and extra coverage that are available.

A bailee insurance coverage expert will walk you through all the details of your coverage so you won’t be surprised. It’s also important to work with a company that has years of experience, as they will work with you to understand your business and your risks.

The one thing you should talk to your insurance company about is the security procedures and systems you have in place. You should also highlight the fact that you have had no claims in the past. Speak to your insurance agent to see if you can get a better rate for your premiums based on these factors.

You also want your insurance company to be available 24/7 because unexpected events happen when you least expect them to. You also want to build a long-term relationship with your insurance company, so they understand your changing needs as you work together.

Contact Bailees Insurance Coverage Experts

We hope that you now understand what bailees insurance does and who needs it. In summary, it protects property that is temporarily in the care of another business, including warehouses, distribution facilities, and repair shops, so the business is protected if the items in their possession are stolen or lost.

Bailees insurance is generally not covered under your general liability insurance, so if you’re looking for more information on bailee insurance coverage, request a quote today. The Soden Agency has been around since 1925, and we can answer all the questions you have about bailee insurance.