Any business that routinely holds customers' property has an exposure that standard commercial property doesn't address. The commercial property policy covers what the business owns — not what belongs to someone else.
Any business that routinely takes possession of customers' property has a coverage gap that a standard commercial property policy doesn't address. Commercial property covers what the business owns. Property belonging to customers is a different matter entirely.
What a Bailee Is
A bailee is any business that temporarily holds property belonging to someone else. Dry cleaners, auto repair shops, jewelers, kennels, storage facilities, tailors, electronics repair shops, and laundries are all bailees. The moment a customer hands over their property, the business has legal responsibility for it.
Most business owners in these industries don't think of themselves as bailees — they just think of it as their normal operation. The exposure is the same regardless.
What the Commercial Property Policy Covers
Standard commercial property policies cover property owned by the insured. Customer goods in the insured's possession are typically excluded — they're not the business's property.
If a fire destroys a dry cleaner's building, the commercial property policy responds to the business's equipment, fixtures, and owned inventory. The hundreds of customers' garments on the racks are not covered. The business is still responsible for them.
The Full Scope of the Exposure
Beyond fire and weather, a bailee faces exposure for theft, mysterious disappearance, and damage during the service itself. A jeweler whose shop is burglarized may owe for customers' pieces that were left for repair. A kennel that loses a client's dog faces liability for the value of the animal and potentially more.
Standard GL doesn't automatically pick this up either — the care, custody, and control exclusion in most GL forms specifically carves out property in the insured's possession.
The Conversation at Renewal
For any commercial client whose business model involves holding customer property — even temporarily — the question is whether their current coverage addresses that exposure. Bailee's customer coverage can be added by endorsement or through a specialized inland marine policy. It's a gap that most business owners don't think about until a claim arrives.