DISCLAIMER: This is only a brief overview of general coverage issues. Actual coverage is determined by the coverage terms, definitions, and exclusions in each individual insurance policy.
The 3 Basic Approaches Cleaners Use to Insure Customer Clothing
The BEST approach is Bailee Coverage:
- Covers customer property as long as it is within your care, custody, and control. That includes while it is in your vehicle, even when the vehicle is away from your store.
- Covers customer property for flood damage.
- Covers customer property for earthquake damage.
- Also covers customer property for the perils on your property policy such as fire, lightning, explosion, theft, etc.
- Insurers that specialize in drycleaners (like NIE) usually offer “unlimited bailee”. That eliminates the need for you to: a) predict the total value of all the customer property in your care, and b) pay the difference when your guess turns out to be too low!
- Can include options for replacement cost values, damage in process coverage, and mysterious disappearance coverage for customer clothing.
The MIDDLE approach is “Personal property of others” coverage:
This coverage for customer clothing falls short of Bailee Coverage in the following respects:
- No theft coverage.
- No flood coverage.
- No earthquake coverage.
- No coverage when garment is more than 100 feet away from your building.
- Unless a higher limit is indicated, the most that insurers will pay in total for all personal property of others is $2,500!
The WORST approach is to purchase neither of the above coverages:
Some insurance agents forget or don’t understand a cleaner’s duty to redeliver a customer’s property. Others foolishly advise cleaners to increase their contents coverage a little to cover customer clothing. Unfortunately, the contents coverage limit is only for property owned by the cleaner.
It provides NO coverage for property owned by your customers! Many insurance agents don’t fully understand or appreciate the significant differences in the above approaches. That’s why NIE only works with full-time fabricare insurance specialists. (Every NIE policy utilizes the “best” approach: Unlimited Bailee Coverage.)