Insurance Coverage for Warehouse Operators

bailee insurance

People and companies that routinely ship goods also have a need to have this merchandise stored in warehouses while in transit. Warehouse operators often referred to as a bailee, make their living by providing such services to their clients. They have been entrusted to store these goods and/or any merchandise up until it reaches its final destination. There are occasions, due to certain exposures, where losses or damage may occur and claims made when issues when something goes wrong.

Examples of the type of perils that could result from this arrangement include fire, theft or other causes of damage to cargo and merchandise in your care. When found either responsible or negligent in the care of your customer’s goods, you’re exposed to claims under a “covered loss”. When you have bailee insurance coverage your carrier pays the customer for any losses incurred.

Similar policies may provide different protection

Not all policies provide the same protections so we suggest you speak to a qualified insurer to determine your specific policy needs. There are regulations pertaining to bailment liability and industry experts understand this better than most. Having a legal responsibility for cargo in your care requires a standard of care that should be met regardless of the value of the items, and your reputation can suffer when clients feel you haven’t exercised the necessary protections with regards to their property.

Since you have legally assumed these liabilities you must be prepared to provide the necessary compensation to the injured party should a problem arise. There may be additional costs that may or may not be covered under policy terms, and that may affect your bottom line as well.

If merchandise is lost or damaged due to a fire, debris removal can be an additional expense not factored in. This is an important consideration when choosing policy options for bailee insurance coverage. You’ll want to make sure that the cost to have damaged property removed from the storage premises, and have these items properly disposed of, is included in your policy terms.

Before taking responsibility for the goods of another party, discuss any contractual agreements related to your warehousing services, and any limitations on recovery associated with the agreement. Make sure to keep copies of all bills of lading, warehouse receipts, and invoices issued for the goods being stored on your premises.

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Insurance Risk Advisors