California Commercial Insurance Practice Exam

In the context of commercial insurance, a bailee is defined as a person in possession or control of another's property. This role is significant because it involves a legal relationship where the bailee has temporary custody of goods or property belonging to another party, known as the bailor. The key aspect here is that the bailee is entrusted with the property and is responsible for its safekeeping, which often comes with certain obligations related to the care and return of that property.

This definition is essential in matters of liability and insurance, as it helps determine the responsibilities and potential coverage in the event of loss or damage to the property. Commercial insurance policies may include provisions that address the risks associated with the actions of a bailee, such as their duty to exercise reasonable care. Understanding the role and responsibilities of a bailee is crucial for both insurers and businesses that handle third-party property, as it directly impacts risk assessment and liability coverage in commercial insurance contexts.