Who Pays When the Storage Facility Damages the Car

Handing a car to a storage facility creates a legal relationship, not just an invoice. Under the law of bailment the holder owes a duty of care to the owner, and where the arrangement is for a charge, that liability generally cannot be released by agreement. What the duty does not do is guarantee a sum, and the gap between duty and sum is where an owner of a car worth several hundred thousand gets hurt.

What the arrangement creates

Bailment is the temporary placement of possession of property by one party into the hands of another for an agreed purpose. The holder owes a duty of care, and the standard can be strict depending on the type of arrangement. Because a commercial storage facility takes the car for a charge, it is generally liable for the ordinary and normal consequences if damage occurs, and cannot simply contract out of that.

Two things follow that owners routinely get backwards:

• A clause saying the facility accepts no liability is not the end of the question. Rental agreements limit exposure, and limiting is not the same as eliminating.
• Liability is not cover. Establishing that a facility is responsible does not create money. What pays is a policy, and which policy pays depends on what each party holds.

Which policy actually responds

The practical route is usually the third row: claim on your own policy, and let your insurer recover from the facility if there is liability to recover against. That is faster than arguing with a facility directly and it is the reason facilities commonly require customers to hold active cover in the first place.

Where the gap opens

Bailee cover is written to protect a business, and businesses insure to the exposure they expect rather than to the most valuable single item that might arrive. On a car of the values discussed on this site, that produces an arithmetic problem:

Those limits are illustrative because facilities do not publish them, which is itself the point: the number that decides the outcome is the one that is hardest to find and the easiest to ask for. Published guidance on storage is consistent that facilities typically provide insurance for stored cars and that the details should be confirmed rather than assumed.

The four questions to ask before the car goes in

• What is the limit per vehicle, and is it per vehicle or per event? A limit that applies across the whole building is worthless if a fire reaches several cars.
• On what basis is value assessed? Market value assessed after the loss and an agreed sum fixed in advance produce very different settlements on a car whose value is rising.
• Does my own policy remain in force, and on what terms? Storage cover typically applies to a vehicle not in use for 30 days or more, and laid up cover is a fire, theft and malicious damage product quoted from as little as 56 GBP a year on ordinary vehicles.
• Who moves the car, and when? Movement inside a facility is the most common damage scenario and the one most likely to be disputed afterwards.

Why the answer is usually both policies

On a car at 500,000 stored at a published 300 to 700 GBP a month, the annual storage bill at the midpoint is 6,000. Adding an owner's laid up policy alongside the facility's own cover is a small addition against that, and it closes the part of the exposure that a business policy was never sized for.

The alternative, relying on the facility's cover alone, means the sum insured on the most valuable thing an owner has is a number chosen by someone else, for their own risk, and rarely stated in the contract that was signed.

Questions readers ask

Is a car insured while in commercial storage?

Usually by two policies rather than one. Facilities commonly carry bailee cover that compensates customers for losses, and most require the owner to hold active cover as well. Published guidance is to confirm the details rather than assume them.

Can a facility disclaim liability?

Not entirely. Under bailment the holder owes a duty of care, and where the arrangement is for a charge it is generally liable for the ordinary and normal consequences of damage. Rental agreements limit exposure, which is not the same as removing it.

Whose insurer pays first?

In practice your own. The usual route is to claim on your policy and let the insurer subrogate, pursuing the facility where liability exists. That is faster than arguing directly and is why facilities require customers to carry cover.

What is the biggest risk on an expensive car?

The limit. Business cover is sized for the exposure a business expects, not for the most valuable single car that might arrive. A 500,000 car against a 250,000 limit leaves half the value uncovered.

What should my own policy be?

Storage or laid up cover typically applies where a vehicle is not in use for 30 days or more, and laid up policies are fire, theft and malicious damage products quoted from as little as 56 GBP a year on ordinary vehicles. Value basis matters more than price at this level.

When does damage most often happen?

During movement inside the facility, which is also the scenario most likely to be disputed. Establishing in advance who moves the car and under what circumstances is worth more than any clause in the contract.

Sources

• Professional Insurance Advisors, bailee coverage explained, for the duty of care owed under bailment, the position where the arrangement is for a charge, and the role of bailee cover in compensating customers.
• The Zebra, what is car storage insurance, for storage cover applying to vehicles not in use for 30 days or more and the risks it responds to.
• Auto Boutique London, car storage guide, for facilities typically providing insurance for stored cars and the advice to confirm the details.