Businesses taking possession of other people’s property in the standard course of their operations are defined as bailees and their customers entrusting property to these individuals are bailors. Bailees are required to exercise the same care with the property of others as they would with their own property. This is best demonstrated by the trucking industry as they take goods assigned by clients and travel long distances, both in the US and the world. They must assume responsibility for any loss or damage while these goods are in their care and possession.
Many businesses attempt to protect themselves from liability for the property of others by having customers sign agreements holding them harmless, using waiver of subrogation contracts, and other disclaimers of liability. However, there are distinct differences between contract and bailment law and the courts have overturned the aforementioned contracts based on the fact that a bailee cannot contract away his or her legal liabilities.
In general, contract law does not apply to bailment situations thereby rendering these types of contracts invalid. With such stakes at hand, there is a need for transportation specialists to carry bailees insurance.
A broader form of protection for many of these bailment scenarios (including warehousing operations) is bailee legal liability insurance. This coverage provides protection for damage or destruction of the bailor’s property while under the bailee’s temporary care, custody, and control regardless of any stated legal liability. Most policy forms also extend protection to customers’ property in transit to and from the bailee’s premises, and this serves the transportation industry as a vital form of coverage. By having this coverage in place it allows for the preservation of customer satisfaction as well.
Consider what is at stake, your operations, and the risks it creates and takes. If you are responsible for the property of others, you need to take the necessary precautions to protect their goods, as well as your own assets and reputation. Invest in your future by discussing bailees insurance with a knowledgeable insurance broker and develop proper risk transfer strategies.