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Understanding 3PL Warehouse Insurance and Liability

If you’re considering working with a third-party logistics (3PL) provider for warehousing, it’s easy to get excited about the many services the 3PL can provide for your products, however, it is not a lie that sometimes it can be hard to determine who is liable for what with so many different parties involved. Therefore, it’s important to understand and agree upon what happens in the event of an accident and/or damage to those products.

Understanding 3PL Warehouse Insurance and Liability

 

In the logistics industry, it’s generally accepted that 3PL warehousing providers are liable for their own storage facilities, equipment, and employees. The specific levels of liability and limitations will be explicitly laid out in the contract that you sign with your 3PL. This contract should cover every conceivable occurrence that can affect your inventory, and delineate the financial responsibility of each party in the event that loss occurs.

A 3PL provider is also responsible for correcting any errors they make during order fulfillment, such as shipping the wrong product, incorrect handling, or loading of products resulting in damage. Investing in a good warehouse management system can reduce these risks and save you headaches.

bailee's customer insurance

 

MetsCube offers Bailee’s insurance on all the products they take care of. Bailee’s customer insurance protects businesses against damage, destruction, or loss of customer property while it is in their possession. A bailee may be any person or business who has been given temporary custody of someone else’s property.

Bailee’s customer insurance provides coverage for customer property that is on the bailee’s premises, or while it is in transit to and from it. Hazards covered in such policies include fire, lightning, theft, burglary, robbery, explosion, collision, flood, earthquake, and damage or destruction in the course of transportation by a carrier.

KEY TAKEAWAYS

  • A bailee is a business owner who takes temporary possession of property belonging to others.
  • Ordinary business insurance covers the loss or destruction of the owner’s property, but not the customers’ property.
  • Bailee customer insurance covers any damages that occur while the property is on the business premises or in transit to and from it.

 

Understanding 3PL Warehouse Insurance and Liability bottom line

 

Although a 3PL provider must protect a client’s inventory, these products are ultimately the owner’s responsibility. When damage to products occurs, the 3PL usually covers a portion of the cost via some form of limited liability insurance, while the customer’s insurance covers the replacement cost.

All in all, both parties share their fair portion of responsibility and risk. Good partners recognize the role both parties play and strengthen the relationship. At MetsCube, we take care of your products to ensure that they are prepped and sent safely to their destination, while we assure that our clients understand exactly what benefits and limitations we offer with regard to the care and custody of their valuable goods. To understand more about our insurance policy, contact MetsCube today.

References

Who’s Liable for What in a 3PL Relationship?

Understanding 3PL Warehouse Insurance

Bailee’s Customers Insurance

 

 

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