This type of protection indemnifies a policyholder for loss or damage to customers’ property while it is in the policyholder’s care, custody, or control. For example, a dry cleaner that damages a customer’s garment would be covered for the loss in value or the cost of repair or replacement, subject to the policy’s terms and conditions.
The significance of this coverage lies in safeguarding businesses from financial liability stemming from events impacting property entrusted to them. It provides a crucial safety net, enabling continued operation even when unexpected incidents occur. Historically, such protections evolved from common law principles of bailment, where the bailee assumed a duty of care for items in their possession.
