Bailee Coverage

Example

“The dry cleaner purchased bailee coverage to protect against claims if customers' clothing was damaged or lost while being cleaned.”

Memory Tip

Remember 'BAIL-ee' like someone posted bail - they're temporarily responsible for something valuable that belongs to someone else.

Why It Matters

This coverage is essential for businesses that handle customer property, as standard liability policies often exclude coverage for property in the business's care. Without bailee coverage, businesses could face significant financial losses if customer property is damaged or stolen.

Common Misconception

Business owners often assume their general liability insurance covers customer property in their possession, but most standard policies specifically exclude coverage for property in the insured's care, custody, or control. Bailee coverage is typically a separate endorsement or policy that must be specifically purchased.

In Practice

A jewelry repair shop has $50,000 in bailee coverage. When a customer's $3,000 diamond ring is stolen during a break-in, the bailee coverage pays for the replacement ring. Without this coverage, the jeweler would have to pay the $3,000 out of pocket, as their general liability policy excludes property in their custody.

Etymology

Derived from the legal term 'bailee,' which comes from Old French 'baillier' meaning 'to deliver' or 'to entrust,' referring to someone who temporarily holds another's property.

Common Misspellings

Related Terms

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See Also