Glossary

Bailee

A person or business holding someone else's property temporarily, such as a repair shop, dry cleaner or warehouse, with a duty to care for it and return it.

Also called: bailee's customers, bailment, bailee liability

A bailee takes temporary possession of property that belongs to someone else, the bailor, for a specific purpose and must return it or deliver it as directed. Dry cleaners, jewelers, auto repair shops, storage warehouses, freight carriers, valet operators and IT repair firms are all bailees. The legal duty is reasonable care, though claim tickets, contracts and tariffs often raise or cap the liability.

Insurance is where bailees get caught. The standard commercial general liability form excludes damage to personal property in the insured's care, custody and control (exclusion j(4) of ISO CG 00 01), so a customer's $8,000 wedding dress ruined in your shop or a laptop stolen from your repair bench is not a CGL claim. Specialty coverage fills the hole: a bailees customers form on the inland marine side (ISO IH 00 85), warehouse legal liability for stored goods, garagekeepers for vehicles, motor truck cargo for freight.

Check two things in the wording. First, whether it pays only when you are legally liable or on a direct damage basis regardless of fault, which matters for customer relations. Second, how property is valued and whether the limit is per item, per location or per occurrence. The guide on bailee coverage: insuring customers' property in your care compares the forms, and inland marine explains where they sit in a package.

Last reviewed October 10, 2026

In the index now

Related terms

Care, custody and control A liability policy exclusion for damage to other people's property that the insured has in its possession or charge, such as a customer's car or goods. Inland marine Property coverage for goods in transit, movable equipment and certain specialty property, written outside the standard building and contents forms. Garagekeepers coverage Coverage for damage to customers' vehicles while they are in your care, such as at a repair shop, parking lot, car wash or valet stand. Motor truck cargo Coverage for a trucker's legal liability when a customer's freight is lost, stolen or damaged while in the carrier's care during transport. Valuable papers and records Property coverage for the cost of replacing or restoring irreplaceable documents, plans and records, normally under a small limit.

Related guides

Aviation insurance for business aircraft owners and operators Aircraft hull and liability, why the CGL excludes aircraft, the pilot and use warranties that void claims, and what charter users and airport businesses need. Bailee coverage: insuring customers' property in your care Bailee's customers coverage pays for customers' property held for service or repair. Legal liability vs direct forms, the processing exclusion, valuation, gaps. Care, custody and control: why the CGL won't pay for property you hold The CGL excludes damage to property in your care, custody or control. Who gets caught, where courts disagree, and which policies fill the gap. Garage liability and garagekeepers coverage How garage liability and garagekeepers coverage protect repair shops, dealers, valets and parking operators, and where the CGL and auto policy fall short. Inland marine insurance for tools, equipment and goods in transit Inland marine insurance covers business property that moves or sits off premises: tools, equipment, goods in transit, fine art. How it works and how it differs. Motor truck cargo insurance: how it works and where it stops Motor truck cargo insurance pays what a carrier owes a shipper for lost or damaged freight. How Carmack liability, limits and exclusions work.

Related industries

Hotel and motel insurance Insurance for hotels, motels and inns: property and business income, guest liability, innkeepers coverage, comp, liquor, cyber and franchise requirements. Jewelry store insurance Why jewelers use a jewelers block instead of a standard property form, and how theft, customers' goods, shipping and security warranties work. Moving company insurance What movers need: cargo and valuation liability under 49 CFR 375, auto liability, general liability, workers' comp and bailee cover, plus state mover rules. Pet business insurance What groomers, boarders, sitters and walkers need: animal bailee for pets in your care, GL for bites, vet reimbursement and homeowners policy gaps. Self-storage facility insurance What self-storage owners need: property, liability, customer-goods and crime cover, how tenant protection plans differ from insurance, and the lien-sale rules. Tow truck insurance What tow operators need: auto liability, on-hook cargo coverage, garagekeepers for storage lots, workers' comp, and the state and municipal insurance minimums.