Warehouse Insurance

Warehouse Insurance or Warehouseman’s Legal Liability protect the warehouseman’s liability arising from damage to their customer’s contents in storage.

What is a Warehouseman?

The business of storing the goods of others for compensation is called a warehouseman. It is difficult for a warehouseman to fully understand their full liability exposure for two reasons:  A customers’ goods in storage may vary in value and also be of an unknown type.

Types of Warehousemen

There are three types of Warehousemen. Public, private, and bonded.
1. A public warehouseman is one whose services are available to anyone who wants to rent and accepts the terms of storage.
2. Private Warehouses are where the goods stored are owned by the same business. ie. The warehouse holds the stock of manufacturers, distributors, department stores, etc.
3. A bonded warehouse is one in which imported goods are stored pending payment of an import duty to Customs. Control of these goods in bonded storage is shared by the warehouseman and Customs authorities. The owner of the goods pays duty each time it wants to remove some of its goods from storage.

What is Warehouseman’s Legal Liability?

A Warehousemen’s Legal Liability policy covers the negligence of the warehouse for its day-to-day operations. Specifically, the insurance protects damage to a customers’ property when caused by the warehousing business.

There are two different policy wordings used by the insurer(s). The first is where coverage offer may be limited to “Named Perils”. Named Perils is where only those types of loses that are specifically named in the policy wording are covered. Eg. Fire, Theft, Vandalism, Hail.

The second wording is the better coverage, where contents would be covered on an “All Risks” basis. All Risks is really a bit of a misnomer, but what it really means is that the coverage is – all risks except that is specifically excluded.

The result is that the All Risks wording offers substantially better coverage. 

Some of the common exclusions under the All Risk Wording could be: 

  • Loss or damage from insects or vermin
  • Extremes of temperature
  • Wear and tear
  • Rotting
  • Molding
  • Breakage, marring or scratching
  • Criminal acts and acts of war.

What Happens If There Is A Claim / Damage?

A lot of times, the warehouse’s customers have their own insurance on their contents they want to be stored. If they do not already have coverage, the Warehouseman may require the owner to obtain Contents In Storage coverage – before they are allowed to rent the space. This practice helps to make it clear to the client that the warehouse is not the primary insurer of the contents – that it is the client’s responsibility to have their own insurance.

If goods are lost, stolen, damaged or destroyed by any cause from the warehouse, the warehouseman is generally only liable if the loss or damage was caused (or contributed to) by his/her negligence. Otherwise, the owners own insurance coverage is expected to pay for the loss.

A warehouseman still needs to insure his possible legal liability to the clients contents though. Once payment for a loss has been made by the client’s insurer, that insurer can then come back to the warehouseman’s policy, if they feel they can prove the negligence of the warehouse.

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