Learn about warehouse legal liability insurance. As a warehouseman you are receiver of property that can be stolen, be highly combustible or potentially contaminating. If your customer's property was damaged while warehoused in your facility, you can be held liable for physical loss or damage to their property.
Warehouse Legal Liability Insurance
If you are the owner of a warehouse - no matter what types of products and materials you are storing inside - it is vital that you carry warehouse legal liability insurance.
As per the United States Uniform Commercial Code, those who own warehouses and charge others a fee for storing their items inside are legally responsible for those items while they are being held within the facility. Should the warehouse suffer a loss and the materials of a customer are damaged, for example, the owner of the warehouse facility can be held responsible for not executing proper care of the materials.
Claims against warehouses can arise for several reasons. Some of the most common causes of legal claims include:
- Damaged inventory
- Improper maintenance of the facility
- Lost inventory
- Structural damage to the building during a storm
The repercussions of these types of claims can be extremely expensive and lead to financial hardship. Moreover, they could do severe damage to the reputation of a warehouse, which could impact future business. In other words, legal claims filed against warehouse owners can cause serious turmoil and could potentially result in a total loss of the business. Given the severity of the repercussions that legal claims can cause, it's important for warehouse owners to carry a warehouse legal liability insurance policy.
What Is Warehouse Legal Liability Insurance?
Since warehouse owners are held legally responsible for the goods that they store, a specific type of insurance policy was created to protect owners from the claims that they could face. Warehouse legal liability insurance is considered third-party coverage. In other words, if a claim is filed against a warehouse owner and the owner is found negligent, the company that provides the policy will pay the customer for the losses that were suffered.
It helps cover a warehouse business as a bailee, which a business entrusted with the property of another. it covers direct physical loss or damage of property that happens during storage, cross-docking, packaging, labeling or other services provided by the warehouseman.
This type of insurance policy protects both warehouse owners and the clients that they serve. Since the insurance company will cover the cost of the goods that he or she was found liable for, the individual will not have to pay out of pocket. And, since this policy pays the client whose goods were damaged, the client will not have to pay to replace those items out of his or her own pocket. In other words, warehouse legal liability insurance protects all parties: the owner of the warehouse and the clients that he or she serves.
What does Warehouse Legal Liability Insurance Cover?
The coverage that this type of policy will provide depends on the specific insurance provider. However, in general, a warehouse legal liability insurance policy will cover the following:
- Accounts receivable. For instance, if a loss that the policy covers causes physical damage to the electronic records of the warehouse, this type of insurance will cover the loss.
- Clients' property. If the goods that a client pays a warehouse owner to store are damaged, this type of insurance will cover the cost of replacing the items.
- Tangible goods. Most standard policies will cover the loss of any tangible property, such as hand trucks, forklifts, computers, and any other materials that are used to operate a warehouse.
Some warehouseman policies will also cover things like the cleanup of any pollution that the warehouse is found responsible for causing, debris removal, and losses to property that result from changes in humidity or temperature.
How Much Coverage Do You Need?
That depends. There are several factors that should be taken into consideration when determining how much insurance you should carry. The size of your warehouse, the type of goods you store, the equipment you use, and the number of clients you services are just some of the factors that should indicate how much coverage you need.
To find out how much coverage you should have, contact a broker that specializes in this specific type of insurance. You can purchase a stand-alone policy, or you can opt for a third party logistics provider policy that includes this type of coverage.
Warehouse Legal Liability Insurance - The Bottom Line
We hope this article on warehouse legal liability insurance was informative. If you own a warehouse, you are legally obligated to properly care for and store the goods you are paid to handle. The right policy will protect you and your customers from any damages that may arise and prevent serious financial turmoil. Warehouse legal liability insurance policy wording, warehouse legal liability vs property of others, warehouse legal liability application, types of warehouse insurance, warehouse property insurance, warehouse storage insurance and warehouse legal liability contract.