Warehouseman's Legal Liability: An Underwriting Overview



- Types of Warehousemen

- The Concept of Warehousemen's Legal Liability

- Class Experience


- Limits/Loss Estimates/Gross Receipts

- Acts of God/Extended Coverage

- Representation

- Exposures/Underwriting Intent

- Defense Costs/Debris Removal




- Sample Application

- Annotated Application with Risk Characteristics Profile



A warehouseman is one engaged in the business of receiving and storing the goods of others for compensation. The goods may vary in value from relatively worthless items to priceless treasures. They may be packaged so that the warehouseman is unaware of their value or identity. By accepting them for storage and safekeeping, the warehouseman may become the unknowing guardian of property prone to theft, of hazardous combustibility or potentially contaminating. The warehouseman's responsibility for the care of such goods may exceed his expectations.

The warehousing industry is one of the world's largest. It continues to grow with remarkable rapidity. In the United States, warehousing has evolved from a direct adjunct to the turn-of-the-century railroad industry to a multi-faceted public and private sector venture. With the growth of the warehousing business and its importance to the nation's commerce, there arose federal and state laws governing the liability and practices of warehousemen. These laws set forth the measure of warehousemen's responsibility for stored goods, provided for inspection, and regulated the issuance of warehouse receipts which are often used as security for loans.


Warehousemen may be public, private, or bonded. A public warehouseman is one whose services are available to anyone who is willing to pay the charges and accept the warehouseman's usual terms of storage. Warehouses which are controlled by department stores, chain stores, manufacturers or distributors are private storage facilities, usually located at or near the main plant. Branch or field warehouses of these private facilities are located at various places in areas of distribution to customers or branch locations.

A bonded warehouse is one in which imports are stored pending payment by the owner of an import duty. Control of goods in bonded storage is jointly shared by the warehouseman and the U.S. Customs authorities. The Custom Service's control is dominant in such situations. The use of bonded warehouses permits an owner or importer to store goods without paying the entire duty or tax at once, but only as goods are withdrawn. This bonded warehouse arrangement is different from a warehouseman who by state law is required to post a surety bond as a condition to engaging in the warehouse business, State laws which mandate that warehousemen obtain such bonds are designed to protect storers from wrongful acts of warehousemen and to assure payment of judgments obtained against them.


As evidenced by the foregoing discussion of types of warehousemen, one can rightfully assume that warehousing is a tricky business and its exposure to legal liability is broad, uncertain and complex.

Warehousemen's Legal Liability policies basically cover the legal liability of an insured as a warehouseman or bailee with respect to physical loss or damage to property of customers of the assured at specified locations subject to designated limits.

Legal liability coverage may be limited to named perils, or insure all loss for which the warehouseman may be liable. Excluded coverages usually are: inherent vice, deterioration, loss or damage from insects, moths, vermin, extremes of temperature, ordinary wear and tear, rotting, molding, breakage, marring or scratching. Additional usual exclusions are processing, war risks and infidelity.

Warehousemen's Liability insurance may contain options for certificate coverage to customers. This affords the warehouseman the facility of providing direct insurance to customers to protect them in the event of loss irrespective of the warehouseman's liability. The policies of insurance issued by warehousemen to their customers are usually referred to as "certificates of insurance" or "advices of insurance."

Certificate coverage is in three forms: (a) limited coverage insuring the perils of fire, extended coverage and other stated perils; (b) broad form coverage insuring all risk of loss excluding damage caused by scratching, marring, denting or chipping; (c) broad form all risks of physical loss or damage coverage including breakage usually subject to a deductible.

More often than not, warehousemen's customers, whether householders or merchants, have their own insurance. Nevertheless, a warehouseman should insure his possible legal liability because, upon payment of loss by the owner's insurer, a claim may be made by the latter against the warehouseman in pursuit of rights of subrogation.

Warehousemen's insurance, particularly for the larger storage companies, often combines features permitting (a) certificate insurance for customers, (b) warehousemen's legal liability insurance and (c) common carrier liability insurance where the warehouseman is also in the cargo or household goods carriage business.

The General Conditions in warehousemen's Legal Liability Insurance are similar to those of other inland marine policies. As an inland marine policy, this type of insurance is like other bailee insurance and it does not usually contain a defense clause. The latter would obligate the underwriter to defend any action brought against the warehouse. In the absence of a defense "clause" the insured is not entitled to a defense by the underwriter in case of suit by a storer of goods. However, for procedural or practical reasons, an underwriter may wish to undertake a defense of a claim against its insured warehouseman under a reservation of rights agreement.

Legal Liability of Warehousemen

To fully diagnose the liability of a warehouseman for loss or damage to stored goods, three steps are necessary:

  • The precise relationship between the custodian and the depositor must be determined. It may be bailee-bailor (the most common), or landlord and tenant (the mini self-storage concept), or carrier and shipper (a category too broad to be discussed here). In the context of this discussion, only the former category is relevant.
  • Specific agreements, undertakings or representations made by the warehouseman must be ascertained, whether oral or in writing, or in correspondence, brochures or advertisements. The warehouseman's liability may be affected by a custom of the trade.
  • Analysis must be made of a written contract, warehouse receipt or other document that relates to the obligations of the parties.


    According to the Uniform Commercial Code (sec. 7-102-1-A) a bailee is defined as a person who by a warehouse receipt or bill of lading or other document acknowledges possession of goods and agrees to deliver them. A bailee's liability for goods in his possession is precise and stringent and will be discussed later. The requirements of a bailment are clear: the depositor turns goods over to the custodian to hold; the latter receives and takes custody of the goods and stores them under his direction and control. Access to the goods is under the dominance of the custodian.

    The most frequent relationship between warehouseman and storer is bailee-bailor. The bailee is bound to issue receipt and his potential liability is not diminished by failure to do so.

    Liability of Warehouseman as a Bailee

    The warehouseman is not an insurer of the stored goods. When goods in the custody of a bailee is lost, stolen, damaged or destroyed by any cause, the latter is generally liable in law if the loss or damage was caused or contributed to by his negligence.


    Insurance Services Office statistics show the relative difficulty of achieving underwriting success over the last six years for which data is available:


    Year, Earned Premium, Incurred Losses, Loss Ratio

    1980, $12,912,337, $20,511,737, 158.9 percent

    1981, $10,537,626, $6,261,184, 59.4 percent

    1982, $11,239,872, $8,194,322, 72.9 percent

    1983, $11,210,533, $12,560,206, 112.0 percent

    1984, $11,995,797, $10,206,002, 85.1 percent

    1985, $13,315,546, $9,780,434, 73.5 percent

    Total 1980-85, $71,211,711, $67,513,885, 94.8 percent

    For the years 1981 through 1985, fire and lightning accounted for 18.39 percent of the losses. Breakage, collision and upset ranked second at 16.3 percent of the losses; and theft, burglary and robbery accounted for 13.94 percent of the losses.


    In this section attention will be focused on less obvious causes of loss and issues which may contribute to less-than-profitable results for the class. The major risk (and source of claim severity) to goods in storage remains loss due to fire. Underwriting the fire aspect of a warehousing account does not complete the underwriting process. The legal liability aspect as discussed earlier complicates the process to a great extent.


    By its very nature, a warehouse represents a continuing, changing exposure as goods are shipped out and replaced by other goods. Often the replacement goods present entirely different underwriting concerns. A modest exposure of canned goods and major appliances one day may be replaced the next by volatile petroleum products and high-value consumer electronics. This constant change of exposure not only makes it difficult to key to a particular cause of loss but equally difficult to establish either normal or maximum loss estimates. This complicates the issue of what limit of liability is appropriate of insured and insurer alike. While no insured wants to be under-insured neither is there any desire to pay for excessive limits. Likewise, the insurer is faced with a choice of retaining all of a high PML or purchasing reinsurance which may not reflect a true exposure. There is no simple solution to this dilemma for either party.

    One starting point, however, is the review of prior gross receipts broken down on a monthly basis. Substantial fluctuations from month-to-month may indicate seasonal impacts and, hence, value concentrations. Underwriting attention can be keyed to such concentrations. Studying the warehousemen's customers during peak periods and the basis on which they release liability on their goods would assist in estimating value exposures. Peril and loss estimates can be projected in this manner. Initial approximations should be modified for the impact of customers who declare higher valuations on their property; amounts in certified storage; connection to a common carrier operation; and the amount of goods stored within terminal premises while remaining "in the course of transit."


    Underwriters should never presume there can be no liability imposed under a contract if the cause of loss or damage is "outside the control of he insured."

    A casualty is said to be an "Act of God" when it results from the direct, immediate and exclusive operation of the forces of nature, uncontrolled or uninfluenced by the power of man and without human intervention. Thus, no carrier, warehouseman or other bailee is deemed liable at common law or under the usual statutory definitions for loss solely caused by an Act of God, unless he agrees to assume such risk, or unless he had warning of the impending loss and could have taken reasonable steps to avoid it.


    A hurricane engulfed defendant's warehouse and damaged plaintiff's goods. Defendant-warehouseman claimed no liability by reason of an Act of God (which no one denied). But the warehouse was located near a river which had during bad weather in the past risen above the lower level of the warehouse building. Bad storms were always a threat to the contents of the building and the warehouseman ought to have been aware of this. Bu he took no precautions to prevent the hurricane damage and was held liable.

    Other perils such as theft, collapse, freezing, sprinkler leakage or other water damage may give rise to a determination of liability if it can be held that a "reasonable man" should have taken greater means to protect the property under his control. The point here is simply that all potential causes of loss must be considered when analyzing a warehouse account. Liability may arise from numerous causes of loss beyond the risk of fire.


    A warehouseman may be found liable for representations made to customers which extend beyond the liability agreed to in the warehousing receipt. Copies of advertising or promotional material should be obtained by underwriters to determine if potentially damaging statements are made. Statements that the building is "Fireproof" or offers "full/high/complete/total" security virtually assure that no defense will exist for any fire or theft claim against the warehouseman who advertises as such.


    The intended scope of coverage provided and the actual language of most warehousemen's legal liability policies are an important underwriting aspect. Few warehouse accounts are simply a place to store goods. A simple review of the local yellow pages reveals services ranging from domestic and international transit and distribution to the rental of moving vehicles and equipment by "full-service" warehouses, plus crating and forwarding services.

    Many of these operations are outside underwriting intent. Others, notably the consolidating, repacking, or crating of goods, fall into somewhat of a gray area. This is due to the fact that such operations historically have been part of the warehousemen's services; are directly involved with the covered property; and are done at the insured premises. Most warehousing receipts address these additional operations as "Extra or Special Services." These extra services are beyond that of basic storage and are subject to separate, additional charges. Policy language may or may not address this issue clearly. This "servicing" of goods goes beyond warehousing per se and moves the warehouseman toward the status of bailee or processor with an increasing degree of liability. Defense under the warehouse receipt may terminate in such instances. If "non-warehousing" services are performed, are they performed under separate contract? If so, a distinction and determination of specific liability is required.

    Many policies cover the insured's liability as a "warehouseman or bailee." Underwriters must determine if the insured assumes all aspects of the warehouse operations are covered and if this intent in granting coverage is clearly stipulated.
    If policy language is not clear in addressing this point, an underwriter's exposure, by policy terms, may be greater than originally intended, underpriced given higher liability, or for "no charge" if only warehousing receipts are being reported. Conversely if processing work receipts are included in gross receipts, the insured would have a "reasonable expectation" of recovery in today's litigious environment.


    The real potential sleeper in most warehousemen's legal liability policies relates to the unlimited expense coverages afforded; i.e., those coverages which do not contribute toward exhaustion of policy limits. Normally these are twofold; one relating to defense coverage and the other relating to debris removal.

    In addressing defense cost coverage, most underwriters are aware of the impact defense against suits has had on the general liability business and its pricing. Using this as the backdrop, have marine underwriters followed casualty underwriters and incorporated consideration of this coverage into pricing? While long and costly litigation has never represented a major challenge to inland marine business, everyone is cognizant of the expenses involved. With this in mind, even the most "groundless" of suits against an insured can quickly erode a premium base on an otherwise loss-free account. Additionally, even if reinsurance has been purchased, defense expenses might be borne solely by the primary insurer without an actual loss occurrence to trigger recovery and sharing of loss expenses. There must be consideration for such probabilities in rate development.

    Additionally with respect to defense costs, does policy language specifically state that the duty to defend ends with the exhaustion of policy limits? If this point is not made, a total loss to policy limits may be irrelevant. Underwriters still will face the continuing costs of defense.

    Warehousemen's Legal Liability presents considerable potential to loss involving environmentally hazardous materials. The unlimited debris removal provision in most WLL policies makes this consideration especially troublesome. Few, if any, marine policies in force today contain any type of pollution exclusion. Given what appears to be an endless list of materials that are categorized as environmentally unsafe, it is not difficult to envision a loss where debris removal expenses, as presently provided, would be several times the amount of the direct loss to the covered property.

    While primary insurers begin to address this issue in their coverages, many reinsurers have already begun to exclude any form of pollution liability. Both treaty and facultative placements are being dealt with in this manner. This may be a response to the "absolute" pollution exclusion of the casualty industry. Reinsurers would like to avoid third party recourse against first party, legal liability contracts. Nevertheless, a primary writer may suddenly find the original net retention unknowingly exceeded by this exposure. Consideration of potentially costly clean up and/or disposal expenses should be incorporated into both normal and maximum loss estimates.


    While not directly the intent of this overview to deal with specific, specialized warehousing occupancies; the size, nature and extent of household goods warehousemen/warehousing deserves some comment.

    The $5.4 billion household goods moving industry is comprised of approximately 250 national van lines, 5,000 agents and 23,000 independent operators. Household goods warehousing represents a major segment of this business and this specialized class poses unique and difficult challenges to underwriters. The household goods mover and warehouseman has a complex legal liability exposure for customer's property in its custody. As a practical matter, it makes good sense for a firm engaged in both moving and warehousing of household goods to cover all of the property of others in its custody (whether it be property in transit or property in storage) with one insurer. This helps to avoid claim handling disputes, eliminate possible "gaps" in coverage, and reduces the mover/warehouseman's total risk costs. Thus, the mover/warehouseman is best served by a package-type insurance policy that includes all of the various coverages needed.

    The warehousemen's legal liability section within a mover/warehouseman package policy affords essentially the same coverage as a general commodities warehousemen's legal liability policy. It may, however, contain an option for the warehouseman to issue certificates of insurance to its customers. This provides direct coverage for the customer's property held for storage, regardless of the warehouseman's liability.

    As with any warehousing risk, the underwriter must assess and be comfortable with the physical characteristics of the risk. Of even greater importance, when dealing with a household goods warehouseman risk, is a thorough underwriting of the quality of management. Is the warehouseman financially stable, reputable, and customer-oriented? Desirable qualities of management include (1) maintenance of an overall risk management program to control loss frequency and severity; (2) good hiring practices for drivers, packers, helpers for loading and unloading and warehouse employees; (3) a formalized and active maintenance program; and (4) a general positive attitude towards loss prevention and control.

    These qualities can best be weighed by visiting the firm and learning how the business operates, determining coverage needs, securing accurate loss experience and determining the extent of the household goods exposed under the warehouseman's liability.

    While general commodities warehousemen form a high-limit class subject to infrequent and severe losses, the household goods warehousemen class is generally bogged down by loss frequency problems. Past loss experience is obviously a good indicator of the quality of an account. Abnormally high loss frequency is symptomatic of weakness in management's loss prevention and control program. Higher deductibles can help to reduce loss frequency, but some type of claims analysis should be undertaken to assist the warehouseman in identifying and correcting problem areas.

    From an underwriting standpoint, the household goods warehouseman deserves a conservative approach with a strong emphasis on risk selection and control. All well-managed warehousemen are good prospects; especially those associated with national van lines, those which have U.S. governmental military agency contracts, and those which are closely-held, family-run operations. To establish and maintain a profit in this class requires thorough and cautious underwriting during the risk selection process. The underwriter must be satisfied that he is dealing with a household goods warehouseman with a top quality management team doing everything in its power to minimize its exposure to loss.


    The foregoing discussion merely "scratches the surface" on the overall topic of Warehousemen's Legal Liability. Beyond the fundamentals touched on here is a maze of complexity arising out of government regulation, burden of proof, changing liability relationships and negotiable documents of title. The depth of this topic usually calls for legal counsel and expertise. Specialized training in the field is highly recommended. However, familiarity with some of the basics should enable interested insurance personnel to deal with some of the routine matters in this area.

    In the two sections that follow, we have set forth those questions which were found to be common to many application forms for this class of business, plus some concepts and clauses which appear in some company policies.


    The purpose of any application is to provide the underwriter with all the necessary underwriting information. The manner in which the information is assembled should be clear, concise, and straightforward. The following sample application for a General Warehousemen's Legal Liability policy addresses the underwriting concerns and risk specifics of this troublesome class. The annotations which follow the sample expand on many of the relevant underwriting and loss control principles. There are other underwriting considerations for specific classes of warehousing risks (i.e., household goods, cold storage, etc.) which are not addressed here. Underwriters should consult with loss control personnel in developing specific information relative to such specialized classes in conjunction with their overall company objectives.


    1. Name of Insured:

    2. Address:

    3. Location(s) to be Insured:

    4. How long has current management operated this business?

    5. Description of Premises:
      1. What is ground floor area?
      2. Height in stories?
      3. Total area (or cubic capacity) of premises available for storage?
      4. Identify and describe area(s), if any, occupied by tenant(s) or lessees:
      5. Any basement(s)? If answer is "Yes," is basement protected by automatic sump pump? Is property stored on shelves or pallets?
      6. What kind of construction: Walls? Roof?
      7. Year built? If recently remodeled, when?
      8. Describe by location and size all pedestrian and vehicle access doors on exterior of building:

    6. Premises Protection:
      1. Is location sprinklered? If "Yes," wet or dry system: Manufacturers name and when installed: How often serviced? By whom? Is system equipped with a Sprinkler Alarm? If "Yes," describe:
      2. List any other private fire protection: Distance to nearest responding Fire Department:
      3. Are your premises protected by an operating Premises Burglar Alarm System? Central Station? Local Alarm? Extent of Protection (i.e., 3AA Alarm): Name of Protection Company: Underwriters' Laboratories Certificate No.: Date of Expiration:
      4. State number of watchmen employed exclusively by you and maintained on duty within your premises at all times when not regularly open to business: Do they signal a Central Station and how often? How many clock stations on premises? How many pull boxes for Central Station Signals?

    7. Estimated total values in storage during previous year: Maximum value any one time: Average value any one time: What is rate of turnover of commodities stored?

    8. Give percentage (by weight) of goods or commodities stored:
      1. Canned Foods
      2. Other Foodstuffs
      3. Furniture
      4. Industrial Chemicals
      5. Cloth Products
      6. Paper Products
      7. Home appliances (other than radio or TV equipment)
      8. Radio/Television/Electronic Equipment
      9. Liquor, wines, spirits
      10. Tobacco products
      11. Tires
      12. Other (describe)
      13. Any red label commodities (describe)

    9. Total number of employees? If any employee(s) bonded, give details:

    10. List annual gross receipts for each of last five years (storage and handling):

    11. What are estimated gross receipts for the next twelve months? Storage: Handling:

    12. Give details and amount(s) of all previous losses, insured or not insured, occurring during past five years, which would have been recoverable under this type of insurance:

    13. Name trade associations in which memberships have been held for one year or more:

    14. Do you subscribe to a loss control program furnished by an outside organization: If "Yes," give name of organization and briefly describe services performed:

    15. Attach a copy of latest financial statement.

    16. Attach a complete copy of the warehouse receipt(s) used. List any commodities stored under special agreements and pertinent details of such agreements:

    17. What policy limit is desired? What deductible?


    Any person who, knowingly and with intent to defraud any insurance company or other person, files an application for insurance containing any false information, or conceals for the purpose of misleading, information concerning any fact material thereto, commits a fraudulent insurance act, which is a crime.

    The applicant agrees that the statements contained in this application are true and that, if insurance if effected, material misrepresentation or concealment of any information voids this insurance.

    Signed: By: Date:


    1. Name of Insured:

    All affiliated or subsidiary companies that are to be insured should be named here.

    2. Address:


    3. Location(s) to be insured:

    List each location that is to be insured. All underwriting information should be provided for each location covered.

    4. Background of Management:

    The background and experience of the insured is crucial in this type of risk. How long has the insured been in business? Is this a new venture? If so, are the principals and/or management experienced in this type of business?

    5. Description of Premises:

    This information must be provided for all locations that are to be covered. This information will give the underwriter a general idea of the capacity of the insured's facilities and a ballpark estimate of the magnitude of the risk. Special attention should be given to Item (d) which addresses adjacent exposures, if any.

    6. Premises Protection:

    Sprinkler and burglar alarm systems are important. This equipment must be kept up-to-date and in good working order, or the insured could be viewed as negligent. The extent of the sprinkler system must also be considered. Does the system have a valve alarm which will notify the alarm company that someone has shut off the system? Is there a waterflow or temperature alarm?

    The installation of a burglar alarm is almost mandatory. A prudent man would want his goods protected during the time his establishment is closed and unattended.
    The question is, to what extent should the protection be? Basically, the more attractive the commodities stored are to theft and/or burglary, the more extensive the alarm system should be.

    7. Estimated Values at Risk:

    To determine an estimated value of goods in storage at any one time will be difficult for the insured to answer. He may, however, deal with only one or two customers and be able to develop accurate information. The turnover rate i.e., how long goods generally remain on premises prior to shipment is also an important factor.

    8. Commodities Stored:

    This is important because it tells the underwriter the commodities the insured handles. This will help the underwriter gauge the amount of protection and security the insured should have to properly protect the property.

    9. Number of employees:

    Gives the underwriter more information about the size and scope of the insured's operation.

    10. Actual Gross Receipts:

    Actual gross revenues for storage and handling for prior years.

    11. Estimated Gross Receipts:

    Estimated gross revenues for the upcoming year. Does this estimate track with prior years' actual receipts? Is the business growing?

    12. Prior Loss Experience:

    If there were any previous losses, the underwriter should delve into the facts concerning those claims.

    13. Trade Associations Memberships:

    Is the insured active in his industry trade groups?

    14. Loss Control Programs:

    Does the insured take any additional steps to safeguard the property stored?

    15. Financial Information:

    A copy of the insured's latest financial statement should be obtained. This will tell the underwriter whether or not the insured's business is profitable or unprofitable; growing, shrinking, or stagnant; and the degree and nature of debt the insured has taken on. It will also serve as a check on information provided elsewhere in the application.

    16. Warehouse Receipt:

    A copy of the insured's warehouse receipt must be obtained. Is it the receipt recognized by the American Warehouseman's Association?

    The warehouse receipt must state three essential things:

    - The customers' goods are not insured

    - The Warehouseman shall not be liable for loss or damage unless he has failed to exercise reasonable care

    - The amount the warehouseman is liable for if proven negligent.

    In addition, any commodities that are stored under special agreements should be listed and the agreements outlined.

    17. Policy limit and deductible:

    How do the policy limit and deductible compare with the average value of property in storage at any one time?

    Finally, the application must be signed and dated by the applicant. Any material misrepresentation or concealment of any information will render any insurance provided null and void?

    This application for General Warehouseman's Legal Liability Insurance is designed to give the underwriter the basic underwriting information necessary to evaluate a risk. It is the underwriter's responsibility, however, to review the application carefully and question any information that is unclear or uncertain.


    In a class of business as complex as Warehousemen's Legal Liability, the importance of a well-constructed, precise policy form cannot be overemphasized. As the nature of warehousemen's legal liability involves Federal and State regulation, plus the presence of negotiable documents of title, there are many individual requirements necessary to enact a viable policy form. Matters such as state requirements for loss payees - (e.g., Illinois, Nebraska and Wisconsin) not addressed within the scope of this discussion - should be examined with each potential assumption of risk.

    The following clause suggestions are of a general nature; hence, do not address specialized commodity warehouse liability, such as that imposed on commodity warehousemen in grain growing states. Underwriters should always consult with legal and claims departments, and company underwriting management in the drafting and initiation of any policy form.


    (The policy should state clearly that it covers only that liability of the insured which is imposed by statute or regulation, for loss or damage of property of others entrusted to its care, custody or control at specified locations.)



    (A statement should show dollar limits, (1) per disaster for general commodities, (2) for furniture movers, (3) for EDP equipment storage, and (4) general merchandise in storage, whichever is appropriate.)


    (In lieu of a straight deductible, a warehousemen's liability deductible and a Sue and Labor deductible may be substituted.)


    (Such items as a company may wish to exclude must be enumerated.)





    (Such terms as: premises, location, occurrence, insured, named insured, household goods, general merchandise, receipts, gross service revenue, gross transportation charges and motor truck gross transportation revenue should be enunciated clearly.)





    (Liability of a company is generally limited to the actual cash value of the property at the time any loss or damage, ascertained or estimated according to such actual cash value with proper deduction for depreciation, however caused. Also, generally, in no event, does it exceed what it would then cost to repair or replace the same with material of like kind and quality.)


    The Exclusions generally found in a Warehousemen's Legal Liability policy include:

    1. Mysterious disappearance, shrinkage, loss of weight, unexplained loss, loss or shortage disclosed on taking inventory;

    2. Any liability assumed by the Insured under any contract or warehouse receipt beyond that imposed by law on the Insured as a public warehouse operator;

    3. Breakdown or failure or improper operation of any refrigerating machinery or equipment;

    4. Insects, vermin, rodents, bacteria, molds, inherent vice, rust, dampness of atmosphere, extremes of temperature or fumigation, latent defect, weevils or other infestations or fumigation;

    5. Wear, tear, deterioration and contamination;

    6. Strikers, locked-out workmen or persons taking part in labor disturbances, or riots or civil commotions;

    7. That portion of any loss or damage from which the Insured has been released from liability;

    8. Any repairing, restoration or retouching process;

    9. Any processing operation including but not limited to cooling, thawing, packaging, repackaging, mixing, ripening or freezing, or any actual work upon the property as described above unless loss by fire or explosion ensues, and then only for such ensuing loss;

    10. Any dishonest, fraudulent or criminal act by any Insured, a partner therein or an officer, director or trustee thereof, employees or agents, whether or not occurring during the hours of employment; plus those against any dishonest acts by anyone entrusted with the property;

    11. Forged bills of lading, loading, shipping or warehouse receipts;

    12. Any loss, destruction or damage caused by or resulting from interruption of heat, light, power, gas or fuel supplied to the premise(s) covered;

    13. Any loss, destruction or damage to property of others in premises covered when the Insured's relationship to the owner or storer of such property is that of a lessor;

    14. Loss or damage caused by or resulting from earthquake, mudflow, earth sinking, earth rising or shifting, landslide or other earth movement (unless specifically endorsed hereon) unless loss by fire or explosion ensues, and then only for such ensuing loss. This exclusion does not apply to property in due course of transit;

    15. Loss or damage caused by or resulting from:

      1. flood, surface water, waves, tidal water or tidal wave, overflow of streams or other bodies of water, or spray from any of the foregoing all whether driven by wind or not;

      2. water which backs up through sewers or drains;

      3. water below the surface of the ground including that which exerts pressure on or flows, seeps or leaks through sidewalks, driveways, foundations, walls, basement or other floors or through doors, windows or any other opening in such sidewalks, driveways, foundations, walls or floors;

      4. release of water impounded by a dam regardless of cause, unless loss by fire or explosion ensues, and then only for such ensuing loss. This exclusion shall not apply to property in due course of transit;
        (Consideration should be give to utilize clauses regarding concurrent causation on these exclusions.)

    16. The War Risk and Military Action Clause;

    17. The Nuclear Hazard Clause; and

    18. Delay, loss of market or use, business interruption or other consequential loss.

      Other clauses common to this class of business include:

      Territorial Limits
      Other Insurance
      Misrepresentation and Fraud
      No Benefit to Bailee
      Notice of Loss
      Protection of Property
      Subrogation or Loan
      Impairment of Recovery Rights
      Claims Against Third Parties
      Examination Under Oath
      Automatic Reinstatement
      Conformity to Statute

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