As a bailee or warehouseman, you’re going to need warehouse liability insurance. After all, if anything happens to goods that you’ve taken on the responsibility for safekeeping, your potential liability requires insurance coverage that will provide you with certain protections. Each state has laws and regulations that govern these types of relationships. As a bailee, it’s your business to store or hold on to personal property that has been entrusted to you by another party.
In most cases, the bailee generally does not provide a written agreement, such as a warehouse receipt or bill of lading, to the party in question. Basically, the bailee is required to act in good faith and provide a reasonable standard of care with the property in their possession. This is tort law, and in order to claim damages, there must be a breach of the duty of the defendant towards the plaintiff, which results in an injury.
Your liability is your primary concern
The three main types of torts are negligence, strict liability (product liability), and intentional torts. If the warehouse operator is deemed to be negligent in his or her duties, any loss or damage to property when caused by negligence on the part of the bailee must be compensated.
It may be difficult to select the correct amount of warehouse liability insurance because the value of the goods may be constantly changing from one customer to the next. It can help knowing what types of property you are in possession of and the value of each individual item. You can then estimate the maximum value of your exposure and garner the necessary policy limits to correspond to your exposure.
A comprehensive warehouse liability policy will not contain a coinsurance clause like many standard property insurance forms do. Coinsurance applies a penalty if your insurance limits do not equal the value of your property in storage. Your policy should also include coverage for defense. For example, if the damage took place prior to you taking possession of an item, you may want to issue a receipt or bill of lading to that effect that will limit your liability.
Speak to an agent about liability coverage, including amounts specific to the type of risks you may be exposed to.