As a business owner, you know that you need to make sure you’re protected from all potential risks. Your building is covered by property insurance, your employees are covered by workers’ compensation insurance, your clients are covered by general liability. But what about the things that don’t strictly belong to you? If your business stores, cleans, repairs, services, or otherwise holds on to your clients’ property, you’re instantly put at risk. If you do computer repairs, for example, chances are that your client wouldn’t be too happy if your sprinklers went berserk and fried their laptop, would they?
To protect your business from the risk that comes along with keeping your clients’ possessions in your care, custody, and control (basically a fancy way of saying they’re trusting you to keep their belongings safe) you might want to consider bailee insurance.
What is bailee coverage?
Bailee coverage is insurance that protects you from the consequences of a loss or damage to your clients’ property. It’s a type of inland marine insurance. Rather than you having to buy a new laptop for your customer, who is at this point quite annoyed that you drowned their computer by accident, your insurance could step in and cover the costs.
Bailee insurance can cover losses such as fire, lightning, theft, burglary, windstorms, explosions, collisions, damage in transport, and those pesky sprinklers in case they decide to sprinkle at an inappropriate time.
Doesn’t my property insurance cover my clients’ stuff?
No, it does not. Your commercial property insurance covers property owned by your business. Since the laptop that met a watery end doesn’t belong to your company, your property insurance doesn’t cover it.
What about my general liability?
Foiled again – general liability insurance usually specifically excludes loss or damage to property that is in your care, custody, or control. You’d end up having to cover the cost of the loss yourself.
Who needs bailee insurance?
If your business ever has control of your clients’ belongings, it’s worth having a chat with your agent about bailee insurance. Cleaners, repairers, warehouses, and hospitality businesses are some examples of industries that frequently use bailee coverage. But those aren’t the only ones.
Keep in mind that if you have a warehouse or a car repair shop, there are different coverages you might want to explore. Warehouse legal liability and garagekeepers’ coverage, respectively, might be a better fit. Your business is unique, so you’ll want to consult with your agent. There are lots of types of inland marine insurance that you might need.
What if I can’t estimate the value of the items that I’m responsible for?
There’s a type of bailee coverage called “unlimited bailee coverage.” With this type of coverage, you don’t have to estimate the value of the possessions in your care to find out how much insurance to buy. That’s handy because you won’t ever find yourself in the collar-tugging situation of underestimating the amount of coverage you need and having to make up the difference yourself.
What if I accidentally break something while it’s in my care?
Okay, imagine this: you spend hours working on the laptop of the client from earlier (we’re pretending it didn’t get sprinklered.) You finish the repair and the computer works great. You feel accomplished and triumphant – victory is yours! You pick up the laptop to neatly put it away to await its owner’s arrival…and promptly trip over a chair, sending the laptop smashing to the ground. That’s not good.
There’s another type of bailee coverage for that – it’s appropriately called damage in process. This can cover operator errors, and it’s not limited to breaking the items in your care. Sometimes mishaps happen. Goods could disappear, items could be damaged due to poor maintenance, or things could get contaminated. And that’s what damage in process is for. It might not make the client any less mad that you accidentally smashed their computer, but at least it could help cover the ensuing financial losses.
What if I lose my client’s possession?
People lose things. It’s a law of physics. Not really, but it should be. If you’re prone to losing things, there’s an option within bailee insurance called “mysterious disappearance” for when things sprout legs and run away. If you accidentally misplace something that belongs to a client, your bailee coverage could help you out.
There’s a big responsibility that comes along with being trusted with other peoples’ stuff. They’re expecting that you’ll return the item in the same condition that you found it (or, well, you know, other than making it work or making it clean.) If your business works with other peoples’ possessions, you need to make sure that you’re protected against any of the possible dangers or mishaps that could befall them.
If you need insurance for your small business, we’d love to earn the chance to help you out with that! We’ve been in this game for a long time, so we’re pretty good at identifying risks and helping our clients develop solutions to protect themselves from disaster. We can get you a free quote if you give us a call or fill out our convenient little quote form today!