Warehouse operators are exposed to the risks of fire, theft and damage of third-party owned cargo stored in their facilities. What’s more, you have a legal liability for cargo loss or damage while in your care, custody or control. In fact, under the United States Uniform Commercial Code (UCC), when you create a bailment situation you legally assume liabilities.
A bailment describes the legal relationship where items or personal property is transferred from one person to another. The person that subsequently has possession of the property at-hand does not have total ownership. These items are typically only used or stored for a period of time and then returned to the rightful owner.
Why is this important? If a facility experiences a loss and a customer’s goods were damaged in the process, the warehouse owner can be held liable for failure to exercise care when handling the possessions. This can be the case when it comes to unexpected theft, fires, floods, loss of power, or missing inventory. Warehouse Legal Liability Insurance is designed specifically for these situations.