Warehouse operators are responsible for the goods and merchandise that they store for a variety of clients. This means that they could face claims from any number of hazards they could face, including the risk of fire, theft or damage to third-party owned cargo contained within their facilities. That means that, if you’re found negligent in the care of your customer’s goods, your insurance carrier directly pays the customer for the loss incurred, provided that such coverage is currently in place.
These types of exposures therefore require a particular type of insurance commonly known as warehouseman legal liability coverage. Warehouse legal liability insurance provides specialized coverage for the insurable exposures of public and commercial distribution warehouses and logistics companies.
The simple fact is that you have a legal responsibility for any cargo that is lost or damaged while in your care, custody or control, and as such you need to protect your business from lawsuits stemming from such losses. You should realize that, under the US Uniform Commercial Code (UCC), when you create a bailment situation you now have legally assumed liabilities and must be ready to provide compensation to the injured party.
Understand that not all policies are the same
The fact that not all policies provide the same protections is crucial and therefore necessitates the expertise of a professional with an understanding of bailment liability and how it works. For example, although defense costs can be a substantial expense when presented as part of a claim for loss or damage, some insurance policies may not include these costs as part of the coverage under the plan.
In many cases coverage may be included, but is also limited to a low percentage of the policy insurance limit. Debris removal, another important thing to consider when looking into insurance options, is another cost sometimes incurred by the warehouse operator or bailee. This represents the cost to have damaged property contained and removed from the storage premises, as well as properly disposed of.
In addition to obtaining warehouseman legal liability coverage, it’s critical to have a thorough understanding of any contractual agreements by which your warehousing services are provided along with the limitations on recovery associated with any and all warehousing agreements, bills of lading, warehouse receipts and invoices issued for the goods being stored on the premises.