Bailee Coverage Insurance: What It Is & How It Works

When your car breaks down, you spill red wine on a shirt, or your watch stops ticking, you expect prompt and accurate repair work from whichever business you take your damaged item to. Of course, you'd expect to be reimbursed if that business damaged your item while they had possession of it. Fortunately, bailee coverage helps businesses pay for incidents that cause damage or destruction to customer property while it's in their care.

A local independent insurance agent can help you get set up with all the bailee insurance your business needs. They can help you find the ideal amount of coverage for your specific operations. But first, here's a breakdown of bailee insurance, what it covers, and why it's necessary.

What Is Bailee Insurance?

A part of a larger business insurance policy, bailee insurance, also known as bailee's coverage or bailee's customer coverage, protects businesses while they have customer property in their possession. Standard commercial property insurance and general liability insurance policies don’t cover customers’ personal property while it's in a business's possession, especially if it’s being fixed or repaired. 

Bailee coverage is another form of inland marine insurance. It can be applied to incidents that damage or destroy customer property while in a business's possession for repairs, maintenance, transportation, or storage. This insurance can cover the costs of repairing or replacing damaged customer property and provide liability protection in case your business gets sued for a related incident.

Bailee insurance is typically added to a commercial package policy, which includes both general liability and commercial property insurance. Typically, business insurance companies won’t offer bailee insurance without general liability insurance. 

How Does Bailee Insurance Work?

A bailee is a person or business that temporarily controls a customer’s property. The insurance industry term for the possession of customer property is "care, custody, or control (CCC)." Sometimes, bailee insurance is also referred to as CCC coverage. 

If a customer’s property gets damaged while in the business’s CCC, the business could be at risk for a lawsuit. Bailee's customer coverage is designed to pay for damage to a customer’s property and provides liability coverage if there is a lawsuit. 

An alternative to bailee insurance is to hold a "harmless agreement" with a customer. This is a legally bound contract in which the customer agrees to release the person or business from any liability if their property gets damaged while in their CCC. 

The Three Types of Bailee Coverage 

Some bailee insurance policies only pay for a portion of the customer’s property loss, while others pay for all of it. As with all types of insurance, there are various levels of coverage in each bailee insurance policy. Here are the three main types of bailee coverage to choose from:

• Unlimited bailee: This type of bailee insurance is the most comprehensive, as it provides coverage without an accurate estimated value of the customer's property.
• Damage in process bailee: This type of bailee insurance covers damages or destruction to customer property while it's being repaired. 
• Mysterious disappearance bailee: This type of bailee insurance covers incidents of losing customer property while it's in your business's CCC.

If you're unsure which level of bailee's customer coverage your business needs, work together with an independent insurance agent.

Who Needs Bailee Insurance?

Any business that has customers' personal property in their possession, even temporarily, could benefit from bailee's customer insurance. Some of the most common types of businesses that buy bailee insurance include:

• Auto repair shops: Bailee insurance for auto repair shops typically includes damage to customers' cars and may have a deductible, similar to standard auto insurance. 
• Dry cleaners: Dry cleaning businesses may have tens of thousands of dollars worth of customers’ clothes in their shop at any given time and need bailee insurance to cover this exposure. 
• Jewelry stores: Jewelry stores are often in possession of valuable customer property while it's cleaned or repaired and need bailee coverage to protect against mishaps.
• Furniture stores: Bailee insurance for furniture stores can protect customer property that's delivered to their home during transportation and carrying. These mishaps are typically not covered by commercial auto insurance.
• Storage units: While not every storage unit business insures their customers’ personal property, some do. In these cases, the rental business may pass the cost of bailee insurance onto its customers. 

Talk to your independent insurance agent about adding bailee insurance to your business insurance policy.

Why a Waiver Isn’t Enough Protection

It's not enough for your business to just require a customer to sign a waiver stating you aren’t responsible for damage to their property. These waivers may only stand up in court if the customer's property is damaged by one of your employees. 

But if the customer's property is damaged by fire, theft, water, or a natural disaster, your business can still be held liable. Waivers only offer a first line of defense that mainly serves to deter customers from suing your business, but they rarely stand up in court. That's why your business still likely needs bailee's customer coverage.

How Much Does Bailee Insurance Cost?

The cost of bailee insurance can vary significantly from one business to the next. Your premiums can depend on the following factors:

• Business size and location
• Business industry
• Business operations
• The number of employees
• Coverage limits and deductibles chosen
• Prior claims history

An independent insurance agent can help you find affordable bailee insurance near you.

Save on Business Insurance

Our independent agents shop around to find you the best coverage.

Request a quote

An Independent Insurance Agent Can Help You Find Bailee Insurance

Independent insurance agents have access to multiple business insurance companies, so they're free to shop and compare policy options and rates for you. They'll present you with only the results that offer the best overall blend of bailee insurance coverage and cost. And down the road, your agent can help you file business insurance claims and update your coverage as necessary.