Almost any business that takes in property belonging to others for cleaning, repair, or processing can insure that property under a Bailees Customers insurance coverage form. The most common example is a laundry or dry cleaner, but furriers, jewelers, shoe repair shops, appliance and electronics repair businesses, and metal or fabric processing operations can also purchase this coverage.
This coverage is typically written on an inland marine coverage form that protects both the customer’s interest and the bailee’s interest in the property while it is in the bailee’s care, custody, or control. Coverage is usually provided on an “all risk” basis, subject to specific exclusions and policy conditions.
What is Bailees Customers Insurance?
Bailees Customers insurance is designed for businesses that temporarily hold or work on property owned by someone else. It helps pay for covered losses to customers’ items if they are damaged, destroyed, or stolen while in your possession, whether on your premises, in transit, or at a job site (depending on the policy).
Without this coverage, a standard business property policy may not fully cover property that you do not own, even if you are legally responsible for it.
Who Needs It?
You may need Bailees Customers insurance if your business regularly has customers’ property in its care. Examples include:
- Laundries and dry cleaners
- Furriers and tailors
- Jewelers and watch repair shops
- Radio, television, and electronics repair businesses
- Auto detailers and upholstery shops
- Metal, wood, and fabric processing or finishing operations
- Storage, warehousing, and similar custodial services
Any business that could be held responsible for customers’ property while it is being cleaned, repaired, stored, or transported should consider this coverage.
What It Typically Covers
While every policy is different, Bailees Customers insurance commonly covers direct physical loss or damage to customers’ property in your care caused by covered perils, such as:
- Fire and smoke
- Theft or attempted theft
- Vandalism
- Explosion
- Certain types of water damage (such as from burst pipes)
- Windstorm and some other weather events
- Collision or overturn of a vehicle transporting covered property (if included)
Policies may offer coverage on a blanket basis (one limit for all customers’ property) or scheduled basis (specific limits for certain types of property or locations).
Common Exclusions and Limitations
Bailees Customers coverage is not unlimited. Typical exclusions and limitations can include:
- Wear and tear, gradual deterioration, or inherent defects in the property
- Dishonest or criminal acts by the insured or certain employees
- Mechanical or electrical breakdown (unless resulting in covered damage)
- War, nuclear hazard, and certain catastrophic events
- Losses beyond stated policy limits or sublimits
- Certain high-value items unless specifically scheduled
Each policy has its own terms, so it is important to review the coverage form, exclusions, and conditions with a licensed insurance professional.
Factors That Influence Cost
The cost of Bailees Customers insurance depends on several factors, such as:
- Type of business and operations performed on customers’ property
- Average and peak values of customers’ property in your care
- Security measures, fire protection, and risk controls at your premises
- Loss history and claims experience
- Coverage limits, deductibles, and any special endorsements
Insurers may also consider where the property is stored, how it is transported, and any special handling or processing involved.
Proof of Insurance and Compliance
Customers, landlords, lenders, or business partners may ask for proof that you carry Bailees Customers insurance, especially if you handle high-value items. You may be asked to provide a certificate of insurance or list certain parties as additional insureds, as allowed by the policy.
Insurance requirements can vary by state, industry, and contract, so businesses should review any agreements and consult with a licensed insurance professional to understand what coverage is appropriate for their situation.
How to Get a Quote
To explore Bailees Customers insurance options for your business, answer a few questions about your operations, the types of property you handle, and your approximate values on hand, then request a customized quote. Get a quote for Bailees Customers insurance to compare coverage options that may fit your needs.
Frequently Asked Questions
Does my general liability policy cover customers’ property in my care?
General liability insurance usually covers damage to others’ property only when it occurs away from your premises and not in your care, custody, or control. Bailees Customers insurance is designed specifically to cover customers’ property while you are holding or working on it, subject to policy terms.
Is Bailees Customers insurance required by law?
Bailees Customers insurance is not generally required by law, but it may be required by contracts with landlords, vendors, or clients. Even when it is not required, many businesses purchase it to help protect themselves from the cost of paying for customers’ damaged or lost property.
How do I choose the right coverage limit?
Businesses often start by estimating the maximum value of customers’ property that could be in their possession at any one time, including busy seasons. A licensed insurance professional can help you evaluate your exposure and select limits and deductibles that make sense for your operations.
Does Bailees Customers insurance cover property in transit?
Some policies cover customers’ property while it is being transported, but not all do. If you pick up or deliver items, ask whether your policy includes transit coverage or if you need an endorsement or separate coverage.
Are high-value items like jewelry or furs covered automatically?
High-value items may have special limits or may need to be specifically scheduled on the policy. If you handle items such as fine jewelry, furs, artwork, or collectibles, discuss these with your insurance professional so the policy can be structured appropriately.
Still have questions? Talk to a local insurance expert.