What is a bailee's customer coverage?

Complete Guide to Bailee's Customer Coverage

Why This Question Matters for Colorado and Utah Residents

Many Colorado and Utah businesses—from ski shops in Park City to dry cleaners in Fort Collins—regularly hold customers' property. When disaster strikes, like a hailstorm or flood, you could be responsible for losses even though you don’t own those items.

• Weather-driven threats: With 68% of inland marine claims in Colorado tied to hail, floods, or severe weather, protecting goods in your care is critical. In May 2024 alone, $3.4 million in weather losses hit Northern Colorado.
• Legal requirements: Colorado law mandates businesses disclose their responsibility (“bailee liability”) for items temporarily in their care, and most carriers require explicit endorsements.
• Business interruption risks: The average bailee-related claim from a weather or theft event is about $28,000—and can trigger business disruption costs of $18,000 per day if you're shut down.

What Most People Get Wrong

Many business owners think their general liability or property insurance will cover customer property—yet most policies exclude damage to items you don’t own. This leaves repair shops, laundries, and even tech stores exposed.

Another misconception: “I’m too small for this.” But with 82% of small businesses in Larimer and Weld counties regularly handling high-value equipment, and only 35% having proper coverage, this is a widespread gap.

The Complete Picture

Bailee's customer coverage is a specialized part of inland marine insurance that pays for loss or damage to customers’ items while they’re in your care, custody, or control. Typical covered perils include fire, theft, flood, hail, vandalism, and accidental damage—risks that are common across Colorado and Utah, especially during storm seasons.

For instance, a dry cleaner in Old Town Fort Collins may be liable for $12,000 in customer clothing lost to a water pipe burst or hailstorm, while a ski rental shop near Park City faces seasonal risks from snowmelt flooding. Bailee’s coverage steps in—often with rapid claims support and rental/replacement reimbursement built in—helping your business recover quickly, protect customer trust, and comply with legal mandates.

Making the Right Decision for Colorado and Utah Residents

Question 1: Does my business handle or store other people's property regularly?

If you answer yes—even occasionally—you need to assess your exposure and ask your agent about bailee-specific endorsements. Considerations:

• How valuable is the typical item in your care (e.g., $300 ski gear, $1,500 designer gown, $5,000 laptop)?
• Is your storage location prone to weather events or theft?

Question 2: What does my current insurance actually cover (and exclude)?

Review your property and general liability policies. Most standard policies exclude customer property unless you add specific bailee’s coverage. For example, verify if coverage applies to items in transit, in storage, or only at your premises. Local risks—like spring floods in Boulder or hail in Greeley—require explicit policy language.

Question 3: How would a major claim impact my cash flow and reputation?

Consider both direct repair/replacement costs and business interruption. A single uncovered loss could mean $18,000+ per day closed (regional average) and damage to your reputation in tight-knit communities like Logan or Colorado Springs. Planning ahead protects your business and customer trust for the long term.