The business of warehousing—public

Warehouse operations—duty of care

State statutes involving warehousing

Warehouse receipts

Scope of insurance coverage—need

Underwriting requirements

Other alternatives for covering these risks

Summary—conclusion

The Business of Warehousing—Public

 Some supporting background information is offered first. A warehouseman is defined in Black's Law Dictionary as “one engaged in the business of receiving and storing goods of others for compensation or profit”. The warehouseman agrees to take and safely store another's property in exchange for compensation. This contractual business arrangement requires a duty of care on the part of a warehouseman to his or her customers to prevent loss or damage to the stored property. And, since the arrangement is a contractual one dealing with goods, the basis of liability for the warehouseman is the Uniform Commercial Code (UCC). Section 7-204 of the UCC deals with the duty of care owed by a warehouseman. That section states that “a warehouseman is liable for damages for loss of or injury to the goods caused by his failure to exercise such care in regard to them as a reasonably careful man would exercise under like circumstances but unless otherwise agreed, he is not liable for damages which could not have been avoided by the exercise of such care.”

 The business of warehousing involves receiving and holding personal property of others, for storage and sometimes for other purposes, such as distribution of a manufacturer's products. Whether the handling of property of others is on a long or short term basis, the extent of the accountability is subject to the terms and conditions of the contract between the parties and applicable federal or state law. The foregoing type of operation is also known as public warehousing, since it involves the temporary possession of property belonging to others. (If the operation involves the handling of property owned by the warehouse, as for example when a manufacturer stores some of its finished goods, it is known as private warehousing; this is not the subject of this article.)

 The relationship between the parties involved in public warehousing is considered a bailment because the owner of property (bailor) relinquishes possession—but not title—to its property to the warehouse owner or operator (bailee) for a specified purpose. Since both parties derive a benefit from this relationship—the bailor is having its property stored and the bailee is receiving a fee for its services—it is said to be a bailment for the mutual benefit of both parties. The standard of care that must be exercised depends on the nature of the bailment. However, in accordance with the UCC, when the bailment is for the mutual benefit of both parties, the bailee (who has possession of the property) has to exercise reasonable care with responsibility for loss or damage attaching upon the bailee's negligence. (Note that, although not involving public warehousing, bailments can also be for the sole benefit of the bailor or bailee. When the bailment is for the sole benefit of the bailor, the bailee has no responsibility for loss or damage. When the bailment is for the sole benefit of the bailee, on the other hand, it involves the highest standard of care.)

 When one stops to think about it, the prevalence of business situations that involve the so-called mutual benefit bailment is virtually endless, particularly since the relationship is not always clearly obvious. In the case of Richwagen v. Lilienthal, 386 So. 2d 247 (Dist. Ct. App. Fla. 4th Cir., 1980) for example, a marina in Florida was held to be a warehouse operation, despite the fact it did not fulfill the legal requirements of such operation, such as issuing a contract (warehouse receipt) stipulating the terms and conditions of the boat storage.

 A warehouse operation could also involve the trucking or freight forwarding business. In light of the legalities of these businesses, they are not discussed here. This is the case even though there are similarities between them. Both warehouses and common carriers, for example, are liable for their negligence and both are excused from liability for losses involving acts of God, in the absence of negligence. In the case of International Business Machines Corporation v. Universal Transcontinental Corporation, 595 N.Y.S.2d 106 (Sup. Ct. App. Div. 2d Dept., 1993), a court held that a certified air freight forwarder would not be viewed as a warehouse operation simply because it stored goods temporarily at its airport facility prior to transport by the carrier.

 Also outside the scope of warehouse operations are leasehold relationships. Lessors of an underground cave used for storage of records, including such documents as warehouse receipts, were not considered to be a warehousing operation by the court in the case of Butler Manufacturing Company v. Americold Corporation, 841 F. Supp. 1107 (U.S. Dist. Ct. D. Kan., 1993). The relationship instead was held to be one of a landlord and tenant where payment was dependent solely on the space rented and not on the goods stored there.

 What brought about the foregoing cases of the marina, air carrier and landlord was the allegation of liability for loss to property of others. It is often easier to show fault on the part of a business when it is considered a bailment than when it is not. Warehousing operations cannot escape the obligation of making good on losses when they are negligent, unlike other businesses that can contract away their negligence through hold harmless agreements.

 Warehouse Operations—Duty of Care

 Apart from the standard of care to be exercised in a bailment for the mutual benefit of the respective parties, warehouse operations are subject to regulation by many federal and state statutes. As noted previously, one of the federal laws that govern public warehouses is Article 7 of the Uniform Commerce Code. It is here under Section 7-204 where the duty of care is explained. It states that “a warehouse is liable for damages . . . caused by its failure to exercise care with regard to the goods that a reasonably careful person would exercise under similar circumstances.” This states that: “[u]nless otherwise agreed, the warehouse is not liable for damages that could not have been avoided by the exercise of that care.” What this last part means is that even though a warehouse operator is excused from liability against acts of God, it can still be held liable for damages if it failed to take reasonable steps which would have avoided or mitigated the loss or damage. An example is where there is an impending flood and the warehouse operator does nothing to reduce the chances of damage in a situation where the damage could have been largely avoided.

 (Note that this particular section 7 of the Uniform Commercial Code was recently revised. The former edition held that apart from the charge of negligence, a warehouse operator could have limited its damages by stipulating a specific amount per article, item or value per unit of weight. This requirement was deleted because it was considered too “out of step” with modern industry practice.)

 Currently, a warehouse may limit its liability for damages by way of the warehouse receipt—which has to be agreed to by the parties—but without constituting an “impermissible disclaimer of the reasonable care obligation.” So, for example, limitations can be based on per unit of weight, per package, per occurrence, or per receipts as well as multiples of the storage rate, but the warehouse cannot contract away its obligation to take reasonable steps to avoid negligence. The states or other federal rules may also supplement this section with more rigid standards of responsibility for some or all bailees. It is important to note that higher damages could also be imposed on a warehouse by the bailor, if the bailee agrees. In such an event, however, the warehouse could charge more for the increased exposure.

 Another reason Article 7 of the UCC dealing with warehouses was revised was to update the provisions in the wake of federal and international developments and to provide a framework for the development of electronic documents of title. However, it has been stated that, to the extent possible, the rules governing electronic documents of title are intended to be the same or similar to the rules over tangible documents.

 State Statutes Involving Warehousing

 States with statutes regulating warehouses may supplement this section of the UCC, dealing with the duty of care, with more rigid standards; to the extent there is any conflict with federal rules, it is said that the state statute controls. In this regard, the following information lists those states that are known to have statutes dealing with warehouse operations. Some of these address certain kinds of warehousing, such as dealing with cotton, grain and tobacco, whereas other statutes are brief and quite limited in their scope. The following information comes from the American Juris Pleading and Practice Forms, Warehouses, Vol.24B, Page 64 and Fall 2009 Supplement, Page 2.

 Alabama Code Sec. 8-15-1

 Alaska Statutes Sec. 34-45-010

 Arizona Revised Statute Sec. 47-7201

 Arkansas Code Ann Sec. 17-101-101

 California Commercial Code Sec. 7201

 Colorado Revised Statutes Sec. 4-7-201

 Connecticut General Statutes Sec. 40-1

 Delaware Code Title 30 Sec. 2301

 Florida Statutes Sec. 677-206

 Georgia Code Sec. 10-4-02

 Idaho Code Sec. 69-209

 Illinois Comp. Stat. Ch 240 Sec.10/0.01

 Indiana Code, Sec. 38.1-1-1

 Iowa Code Ann. Sec. 169-1

 Kansas Statutes Sec. 34-223

 Kentucky Rev. Stat. Ann. Sec. 321-181

 Maine Rev. Stat. Title 11 Sec. 7-209

 Maryland Code Comm. Law (I, II) Sec.7-101

 Massachusetts Gen. Laws Ch 105 Sec.1

 Michigan Stat. Ann. Sec. 444.1

 Minnesota Statutes Sec.223.15

 Mississippi Code Ann. Sec. 73-39-51

 Missouri Stat. Sec. 415.010

 Nebraska Rev. Stat. Sec. 88-525

 Nevada Rev. Stat. Sec. 712.010

 New Jersey Stat. Sec. 12A:7-206

 North Dakota Cent. Code Sec. 43-29-01

 Ohio Rev. Code Sec. 1333.23

 Oklahoma Stat. Title 2. Sec. 9-20

 Pennsylvania Stat. Ann. Title 63 Sec. 485.1

 Rhode Island Gen. Laws Sec. 6A-7-209

 South Carolina Code Sec. 39-19-10

 Tennessee Code Sec. 47-7-209

 Utah Code Sec. 70A-7-209

 Virginia Code Sec. 8.7-209

 Washington Rev. Code Sec. 22.09.011

 West Virginia Code Sec. 46-7-209

 Wisconsin Stat. Sec 99-01

 Warehouse Receipts

 Essential to warehouse operations is a warehouse receipt, which is a document that deals with the transactions of the parties and, in fact, is mandated by law. The warehouse receipt can be in any form and include any terms not contrary to the Uniform Commercial Code. To be valid, however, Section 7-202 of the UCC requires that this document contain the following information:

 1.A statement of the warehouse facility's location and where the goods are stored;

 2. The date of the receipt's issue;

 3.The unique identification code of the receipt;

 4.A statement whether the goods received will be delivered to the bearer, to a named period, or to a named person or its order;

 5. The rate of storage and handling charges, unless goods are stored under a field warehousing arrangement, in which case a statement of that fact is sufficient on a nonnegotiable receipt;

 6. A description of the goods or the packages containing them;

 7.The signature of the warehouse or its agent;

 8.If the receipt is issued for goods that the warehouse owns, either solely, jointly or in common with others, a statement of the fact of that ownership; and,

 9. A statement of the amount of advances made and of liabilities incurred for which the warehouse claims a lien or security interest (unless the precise amount of advances made or liabilities incurred is known at the time the receipt is issued, in which case a statement of the fact that advances have been made or liabilities incurred and the purpose of the advances or liabilities is sufficient).

 Warehouse operators who add disclaimers to their warehouse receipts in an attempt to exonerate themselves from any fault will likely encounter problems; the kind of disclaimer that comes to mind is the one that appears on auto parking stubs or on checkroom tickets. A case on point that involved another marina is Fireman's Fund American Insurance Company v. Capt. Fowler's Marina, Inc., 343 F. Supp. 347 (U.S Dist. Ct. Dist. Mass., 1971).

 While a boat was in winter storage at a marina, a fire of unknown origin broke out on a yacht stored adjacent to the boat. The marina did not employ a night watchperson and had no available source of water on the premises. A clause in the contract between the marina operator and the boat owner stated that: “it is agreed that the boat and all the property of the boat is at the sole risk of the boat owner, while on the marina premises, and that Capt. Fowler's Marina, Inc., its agents, servants and employees will not be liable for damage to or loss of said boat and all other property of any kind, no matter how occasioned.”

 The court, in ruling against the marina that claimed it was not liable, held that the relationship was a bailment with the exculpatory clause being invalid for violating Article 7 of the UCC. The court also stated that where a bailment has been shown, a presumption of negligence on the part of the bailee arises upon a mere showing by the bailor that he delivered the property to the bailee in good condition and that it was returned, as here, in a damaged condition.

 Apart from the foregoing, there is nothing to prevent a warehouse operator from reducing its potential loss amount by agreement with the property owner, or enlarging the potential loss amount when the property owner demands it, and the warehouse operator still wants to do business with the owner. What warehouse operators must be careful about, however, is not to enlarge their responsibility. An important reason is that they are likely to run afoul of any insurance and the law, if they were to agree, for example, to be responsible regardless of fault.

 Scope of Insurance Coverage—Need

 A warehouseman's legal liability policy offers to cover the named insured's legal liability for loss to covered property while under the named insured's care, custody, or control. Operators of public warehouses need Warehouse Operators Legal Liability insurance for at least two reasons: The first is that the Uniform Commercial Code (and possibly other laws) stipulates that the operator is liable if its negligence causes damage to property of others in its care, custody or control. (The warehouse receipt must state that the operator is not liable for loss to property of others unless caused by its negligence; in other words, the warehouse receipt serves as a basis for liability assumed by the operator.) A second reason for carrying this coverage is that a commercial general liability policy will not cover the operator's liability in light of exclusion j (4) of the liability policy which precludes coverage for personal property in the care, custody or control of the insured.

 This was precisely the issue in the case of Essex Insurance Company v. Soy City Sock Company, 503 F. Supp. 2d 1068 (U.S. Dist. Ct. C.D. Ill., 2007), where a warehouse operator was held to be without liability coverage under its CGL policy for the destruction of another party's personal property. The Achilles heel was the care, custody or control exclusion of the warehouse operator's CGL policy. Why the warehouse operator did not have some other forms of insurance to cover damage to personal property in its care, custody or control is uncertain. This failure, however, proved to be an expensive proposition, considering that the loss was in excess of $550,000.

 A property policy purchased by the warehouse operator could have covered personal property of others in its care, custody or control, without regard to liability, but the operator, in doing so, would have assumed more responsibility than the law prescribes. The insurance also would likely have cost more.

 A Warehouse Operators Legal Liability policy falls under the category of inland marine insurance. This means that the policy's provisions can vary by insurer. These policies also are cross between a property and liability policy, much like fire legal liability coverage, and the coverages comprising equipment breakdown or crime insurance.

 What is unique about a Warehouse Operators Legal Liability policy is that, while it is intended to protect the warehouse operator in the event of its negligence, the amount payable hinges on (1) the property described in the warehouse receipt and (2) its designated value. In the case of International Nickel Company v. Trammel Crow Distribution Corp., 803 F.2d 150 (C.A.5, Tex., 1986) for example, a warehouse operator's limitation of liability clause, which limited its liability for loss of stored metal (nickel) to “100 times metal's base—storage rate”, complied with the UCC requirement that liability be limited to either per item or per unit of weight.

 It is important to emphasize here that the warehouse operator cannot waive or eliminate its obligation of legal liability as mandated by the UCC. Despite this law, some warehouses have attempted to exonerate themselves from any fault. In the case of Kimberly-Clark Corp. v. Lake Erie Warehouse, Div. of Lake Erie Rolling Hill, Inc., 375 N.Y.S. 2d 918 (1975), the warehouse operator maintained that it was exempt from liability for damages to stored goods, even though caused by the operator's negligence, because the depositor (bailor) had secured property insurance covering such loss. The court disagreed with the warehouse operator's argument, holding that the UCC does not authorize exculpatory provisions like those that were contained in the warehouse operator's receipt.

 Also, as pointed out earlier, the operator can reduce the amount of loss (valuation) by agreement with the depositor (bailor or property owner). Valuation and, hence, the amount of loss payable, in the event of the operator's negligence also can be enlarged, if the depositor demands it and the warehouse receipts reflects such a valuation.

 Despite the fact that provisions of these policies may vary, one of the provisions common to these policies is the insuring agreement. Usually concise and to the point, coverage applies to the named insured's legal liability for direct physical loss by a covered cause to covered property of others in its care, custody or control.

 The legal liability feature of these policies has an interesting characteristic. With the policies' inland marine-type coverage feature, warehouse operators, like common carriers, are not liable for loss caused by acts of God. When, however, an operator has an opportunity to avoid impending loss (flood for example) or mitigate loss (a fire) after it occurs, but does not take any action, its immunity for a loss vanishes.

 Another common provision is that no coverage applies if a warehouse receipt has not been issued. The reason is that there is no way to determine the nature of the property covered and its value. Even if this provision were not a part of the policy, coverage would still likely be nullified, since the absence of a warehouse receipt would be a violation of the UCC. (As noted subsequently, the ISO Warehouse Operators Legal Liability coverage form makes no reference to the term “warehouse receipt”. This does not mean that a warehouse receipt is unnecessary nor does it mean that a receipt is not issued. It still may be for a warehouse operation, but reference to the receipt in a coverage form may reduce the chances of argument in the event of a coverage dispute.)

 Given the “quasi” nature of the Warehouse Operators Legal Liability policy, insurance buyers should realize that many losses will not be covered. These can be grouped into three categories: (1) nonfortuitous loss, that is, those losses that do not happen by chance, such as wear and tear, deterioration, corrosion, rust or dampness of atmosphere; (2) losses that can be covered by other insurance, such as employee dishonesty; or (3) non-insurable losses, such as defects in property or unexplained loss.

 A review of the AAIS Warehouse Operators Legal Liability form, IM 7650 04 04, shows that the legal liability coverage agreement states that the insurer will pay for the named insured's legal liability to (1) covered property, (2) while under the named insured's care, custody or control and (3) that the named insured becomes legally obligated to pay as a warehouse operator under a warehouse receipt issued by the named insured. This form also defines “warehouse receipt” to mean: “the receipt issued by 'you' to 'your' customer acknowledging that property is being stored at 'your' warehouse and includes a description of the property, the weight or number of units being stored, and the limited liability assumed by 'you'.”

 Considering that the issuance of a warehouse receipt is required by law, and it is the document by which the warehouse operator is enabled to explain the extent of its legal liability and the amount of loss, it seems natural that the Warehouse Operators Legal Liability coverage form makes reference to the warehouse receipt. In fact, the AAIS form also requires that the named insured produce a copy of the warehouse receipt at the time of loss.

 As noted, the ISO Warehouse Operators Legal Liability coverage form, IH 00 81 09 09, interestingly, makes no reference to the term “warehouse receipt”. The insuring agreement states that the insurer will pay sums the named insured becomes legally obligated to pay as damages as a warehouse operator or bailee because of direct physical loss or damage to covered property from a covered cause. No warehouse receipt is required following loss nor is any apparently to be used to establish the amount of damages, when agreed to by the respective parties to the contract.

 What also is interesting is that the ISO Bailee Customers Coverage Form, IH 00 85 09 09, excludes property the named insured accepts for storage. If a limit of insurance is shown in the Declarations for storage, however, property that the named insured accepts for storage is covered at the described premises, if the named insured has issued a storage certificate for such property. It appears on the surface, therefore, that the Bailees Customers Coverage Form is better suited for a warehouse operation, but what will dictate the appropriate form will hinge on what form the underwriter wants to issue.

 It is unnecessary to explain specifically the nature of the exclusions applicable to both the AAIS and ISO coverage forms, because many of the provisions can likely be changed to better tailor the risk, to the extent an underwriter is willing.

 Underwriting Requirements

 Insurance underwriting is the art of determining whether an applicant is eligible for the coverage sought and then deciding on the extent to which various coverages will be provided. While the basic provisions of a Warehouse Operators Legal Liability policy are the same for all risks, the policy usually needs to be tailored to fit the particular needs of the warehouse, and that is only possible when the underwriter is receptive to providing the coverages sought. In some cases, the only alternative may be to accept what the underwriter offers.

 In considering Warehouse Operators Legal Liability insurance, underwriters are likely to ask many questions. They are not likely to be easy marks with this kind of insurance, although some bad risks can fall between the cracks for one reason or another. Although the insurance includes some liability coverage, many of the underwriting considerations will be focused on property insurance exposures. Thus, for example, the underwriter will want to know about the construction of the facility for purposes of storing property of others.

 Construction of the buildings or structures involves not only the nature of the materials comprising them, e.g., frame, brick or fire resistive, but also the number of stories, total area and the age of appliances and equipment used to service the operation.

 The nature of occupancy is very important, particularly if the warehouse operator is conducting additional services other than simply storing property of others. Whether the warehousing operation is the primary function or ancillary to some other business also is important. An example of the latter situation is a warehouse that serves as the intermediate stop and transfer of cargo by a common or contract carrier.

 Underwriters also will want to know about internal and external forms of protection. Internally, the protection might consist of both sprinklers as well as other warning systems such as burglar alarms, security guards, or barred windows to thwart possible non-employee thieves. In the case of Barlow Upholstery & Furniture Company v. Emmel, 533 P2d 900 (1975), the Utah Supreme Court held that, in an action by owners of stored goods destroyed by fire, the warehouse was not negligent, as a matter of law, because it did not have a night watchman or an automatic sprinkler system. Much apparently depends on an underwriter's tolerance for risk. External forms of protection also could include the distance from hydrants and the nature of fire protection provided by the municipality.

 A sound financial condition of the particular warehouse operation is an essential prerequisite of underwriters, just as is the case with most other businesses. In scrutinizing the income statement and balance sheet, the underwriter will want to know just how financially stable the applicant is. A warehouse (or any business for that matter) that is unprofitable may skimp on the protection provided, or hire people who may be less qualified than a warehouse operation normally requires. The net result might be management that is indifferent concerning loss potential when insurance is available.

 A copy of the warehouse receipt issued by the warehouse operation is, of course, an essential document. This document, which is required by federal law under the Uniform Commercial Code, needs to be reviewed by the underwriter because it describes the conditions under which the property will be stored by the warehouse operator, the nature of the property stored, and the storage charges.

 Where products stored are perishable, underwriters are likely to have the risk inspected from an engineering perspective to determine potential causes of loss. This precaution also is likely to apply when the nature of the operation is cold storage of food, chemicals and other products, since these operations consist of some different exposures than other warehousing operations.

 According to 78 American Jurisprudence 2d, Vol. 78, Sec. 90, a cold storage warehouse “stands on a different footing than the ordinary warehouseman”. The rationale for this statement is as follows: . . . from the nature of such storage, the warehouseman is ordinarily regarded as impliedly warranting or undertaking to maintain a temperature in the building which is proper for the preservation of the stored property. Furthermore, legislation is sometimes enacted regulating the code storage of food. . . . In any event, like other warehousemen, the proprietor of a cold storage warehouse is requested to exercise reasonable care for the preservation of property stored therein.

 To the extent cold storage warehousing is an acceptable risk, underwriters will want to know the nature and age of the equipment and the extent to which alarms are employed if temperatures were to fluctuate beyond controlled levels. They also are likely to be interested in whether the warehouse operator has a contingency plan in effect if there is a breakdown in equipment, since such an event could produce disastrous results, if the temperature were to fall below the minimum required level.

 Underwriters may accept such risks subject, however, to the existence of standby equipment and/or the use of higher deductibles. What applicants need to be mindful of is the addition of any exclusions or limitations. For example, a policy covering cold storage might apply only to certain kinds of events, such as breakdown of equipment. An exclusion for leakage of a refrigerant also can be a detriment to a cold storage warehouse operation, if the property stored is susceptible to contamination.

 Other Alternatives for Covering These Risks

 Given that warehouse operations deal with the care, custody or control of property belonging to others, general liability insurance is definitely not an option due to the care, custody, or control exclusion. The question then is whether property insurance forms can serve as workable alternatives.

 One possible alternative is the personal property of others coverage option available in relation to the ISO Building and Personal Property Coverage Form, CP 00 10 06 07. It might be suited for a small warehouse operation, since underwriters are not likely to write this coverage for high limits and, of course, a great deal of the property at risk is the personal property of others. Note that the property form does not make coverage dependent on legal liability; if there is a loss from a covered cause, the loss may be payable. Also, such payment for loss or damage to property of others will be for the account of the owner. Thus, the owner has to make a claim for the loss or damage. With a warehouse operation, the party whose property is damaged has a direct right against the warehouse to seek damages. Also, the coverage is likely to be more limited in terms of the amount of insurance available, and the covered causes of loss could be more limited than when coverage is written on an inland marine form, where coverage also is traditionally more flexible.

 Coverage for property of others is not available on a replacement cost basis, at least not within the basic provisions of the commercial property form. The Building and Personal Property Coverage Form, however, offers an extension of replacement cost to personal property of others. This extension states that if an item of personal property of others is subject to a written contract which governs the named insured's liability for loss or damage to that item, the valuation will be based on the amount for which the named insured is considered to be legally liable, subject to the lesser of the following two amounts: (1) the replacement cost, or (2) the limit of insurance.

 Another alternative might be the ISO Bailees Customers Coverage Form, IH 00 85 09 09, to the extent an underwriter is willing to write it for a warehouse operation. Given that the warehouse operator is excused from certain losses and the operator can limit the amount of its damages, if there is an agreement with the other party, some kind of a provision is necessary in the policy to permit this kind of loss settlement.

 Use of the ISO Legal Liability Coverage Form CP 00 40 06 07, which is a property form, could be another alternative. This covers the named insured's legal obligation to pay damages to covered property caused by accident and arising out of a covered cause. The covered property is tangible property of others in the named insured's care, custody or control. To determine the exclusions and limitations, one must refer to the appropriate causes of loss form that applies in conjunction with this coverage form.

 There may be other independently filed property policies that offer better coverage for personal property of others or may be more flexible in handling the kind of risks commonly written by the Warehouse Legal Liability Coverage Forms. Individual insurer warehouse liability policies usually reflect the particular insurer's underwriting philosophy and coverage guidelines.

 Summary—Conclusion

 Warehouse Operators Legal Liability coverage is primarily targeted for those in the business of storing property of others (the public). As such, they must follow the mandates of federal and applicable state laws, one of which is to issue a warehouse receipt that includes certain essential information.

 The insurance policy, itself, covers only when the operator is negligent, with the amount payable, in part, dictated by the valuation in the warehouse receipt. Like common carriers, warehouse operators are not liable for loss caused by acts of God. An exception is when an act of God creates an impending loss which an operator can prevent or reduce the chances of happening by taking specific, reasonable action.

 As a policy consisting of inland marine, property and liability provisions, a Warehouse Operators Legal Liability policy has many provisions that need to be considered in tailoring coverage to the needs of the prospective insured.