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Warehouse Legal Liability Insurance

Warehouse owners are exposed to the risk of fire, flood, theft and damage of third-party owned materials stored in their facilities. Under the United States Uniform Commercial Code (UCC), a warehouse owner assumes responsibility for the materials they store for others for a fee. If your facility experiences a loss, the third party must prove that you failed to exercise due care over their possessions. Regardless of the size of your warehouse, either one room or a large-scale facility, you must protect yourself against potential liability with the proper insurance coverage. 

Warehouse Legal Liability Insurance provides protection in the event that negligence on your part results in damage to someone else’s property. According to Uniform Commercial Code Section 7-204(2), “Damages may be limited by a term in the warehouse receipt or storage agreement limiting the amount of liability in case of loss or damage, and setting forth a specific liability per article or item, or value per unit of weight, beyond which the warehouse owner shall not be liable.” This means that your contract must detail the value of what is placed in your storage facility to determine damages in the event of a loss. 

Coverage Options:
  • Warehouse legal liability policies cover your legal liability as the warehouse owner with regard to a failure to exercise due care to prevent a loss. For example, you would be held liable if you forgot to set your facility’s alarm and thieves stole materials stored by a third party.
  • Bailees’ customers policies cover stored property with regard to loss or damage without taking your legal liability into account. This protection is more encompassing but comes at a higher price tag. 
Coverage Exclusions:

A typical policy excludes the following:

  • Accounts, bills and currency
  • Mysterious disappearance
  • Conversion
  • Delay, loss of market or loss of use
  • Loss caused by forged warehouse receipts
  • Nuclear device
  • War
  • Governmental authority
  • Change in temperature or increased humidity
  • Infestation or deterioration of the property
  • Contaminated goods
  • Debris removal
  • Legal defense costs
  • Materials not covered by a warehouse receipt 

In addition to purchasing a Warehouse legal liability policy, it is wise to establish safeguards in your facility to protect against losses. This may include researching the crime rate in your area and inspecting neighboring businesses for hazards that may affect your facility; storing goods on solid shelving; storing electronic equipment in a climate-controlled area; and screening employees thoroughly to avoid hiring a potential thief. Protecting against liability can be tricky; let us guide you through the process. Contact Chadler Solutions today!

 

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