Specialty · Insurance Term
Bailee's Customers Coverage (Bailee Coverage)
Definition
Bailee's customers coverage insures customers' property while it is in your care for service, storage or repair, such as garments at a dry cleaner or goods in a storage business. It can pay for the loss whether or not you were legally at fault.
In Plain English
A bailee is someone holding another person's property for a purpose, like cleaning, repair or storage. Standard property policies give only limited coverage for personal property of others, so businesses that routinely hold customer goods often buy bailee's customers coverage, usually written as inland marine.
Two approaches exist. Legal liability coverage pays only if you are legally responsible for the loss. Bailee's customers coverage can pay regardless of fault, which helps protect customer relationships. Warehouses commonly use warehouse legal liability, which is the legal liability approach.
For property owners, this usually comes up with tenants. A dry cleaner, repair shop or storage tenant in your center should carry its own bailee coverage; your building policy is not designed to cover their customers' goods.
Not sure how your policy handles this? Have us review it, or get a quote.
Example
Hypothetical: a fire in a strip center damages a dry cleaner's unit, destroying $40,000 of customers' clothing. The dry cleaner's bailee's customers policy pays the customers, even though the fire started in a neighboring unit and was not the cleaner's fault.
What to Watch For
- Ask service tenants (dry cleaners, repair shops) for proof of bailee coverage.
- Check whether the form is legal liability or pays regardless of fault.
- Make sure limits match the peak value of customer goods on hand.
Last updated October 14, 2026 · Primesure editorial team · How We Write