I have always assumed that the intent of laundry bailee coverage is to cover customers' property if the laundry damages it.

Colorado Subscriber

A

The processing or work upon exclusion is customary is bailee's coverage forms. By means of that exclusion, the insurance company is saying that its coverage applies to accidental loss or damage, but it will not cover loss or damage that is caused by or results from the insured applying its own processes to the covered property. A laundry, in other words, has to be able to launder its customers property without damaging it in the process. That is a “business risk” that the laundry owner has to accept and handle. Accidental damage to property other than through processing is the risk that the bailee's customers floater intends to cover.

As for the payment of the earlier loss in which it was determined that there was coverage, might there have been an intervening peril that would allow coverage to go forward? For example, a mechanical failure within the equipment that would dump an excessive amount of bleach into a load of laundry would provide a rationale to some for coverage. The mechanical breakdown is not covered, of course, but the accidental dumping of bleach that ensued from the mechanical breakdown is not part of the regular “processing” either. Some adjusters and claims supervisors are willing to recognize the difference between improper processing and an accident that causes processing to go haywire.

We doubt very much that there is a bailee's customers form on the market that does not have this very old and very standard processing exclusion.