What Is a Warehouser's Liability Form?

A warehouser’s liability form is a document that describes the obligations of a storage facility toward its customers. Warehouse owners and operators can be held liable if the goods being stored in their warehouse are destroyed, damaged, or stolen. Thus, warehouser's liability insurance exists to protect owners and operators against the costs of legal defense, damage awards, and other expenses related to a damage claim. 

Key Takeaways

  • A warehouser’s liability form is a document that describes the obligations of a storage facility toward its customers.
  • Warehouse owners and operators can be held liable if the goods being stored in their warehouse are destroyed, damaged, or stolen.
  • Warehouser's liability insurance exists to protect owners and operators against the costs of legal defense, damage awards, and other expenses related to a damage claim. 
  • Because warehousers are held responsible for goods in their possession, it’s in the warehouser’s interest to clearly establish with a customer its rights and obligations before taking possession of a piece of property.

Understanding a Warehouser's Liability Form

Warehouser’s liability forms vary between different storage facilities. Also, certain types of property are commonly not covered by a standard form, including money, precious metals, and stones. Once the owner removes their goods from the warehouse and signs a warehouse storage receipt and release of liability, the warehouse owner or operator is no longer responsible for the goods.

Warehouser’s Liability Insurance 

Under the United States Uniform Commercial Code, storage facility operators assume liability for the goods which they warehouse in exchange for a fee. These warehousers must follow a legal standard known as reasonable care, and if a warehouser doesn’t take reasonable care to protect a stored good, the company is liable for damages. Therefore, warehouse companies must buy additional insurance to protect themselves against the chance they need to compensate customers for damaged goods. In cases when property is damaged as a result of of an insured warehouser’s negligence, the insurance company will often pay the property owner directly.

The relationship between a warehouser and the owner of the goods being warehoused is known as a bailment, which comes from the Latin word bajulare, which means to bear a burden. In the United States, bailment laws regulate the relationship between the owner of a piece of property and another party which is put temporarily in charge of that property.

A bailment is any situation in which property is rightfully controlled by a party that is not the owner. A bailment does not have to be established by a contract to be recognized by courts in the United States, and a property owner wishing to claim damages must establish that a bailee had both the possession of a physical good and the intent to exert control. As bailees, warehousers have a responsibility to protect the property in its control up to a certain point, though they are not held liable for damage to property that results from an Act of God, like an earthquake.

Because warehousers are held responsible for goods in their possession, it’s in the warehouser’s interest to clearly establish with a customer its rights and obligations before taking possession of a piece of property, with the help of documents like a warehouser’s liability form.