Custodian

What Does Custodian Mean?

A custodian of insurance is someone entrusted with the possession of property or goods through a contract of bailment. Unlike in a contract of sale, where ownership is transferred, the custodian is legally obligated to return the property to the bailor.

A custodian is also referred to as a bailee.

Insuranceopedia Explains Custodian

Bailees (or custodians) are responsible for the safekeeping and return of the property to the bailor or for disposing of it according to the terms specified in the contract of bailment. Bailees owe a duty of care to the goods or property while in their possession. Businesses that handle other people’s property as part of their work, like dry cleaners or auto repair shops, often carry bailee insurance to pay for damage or loss to items they’re holding for a customer.

While the bailee has responsibilities regarding the property, they are not authorized to make contracts on behalf of the bailor. Additionally, bailors are not liable for the actions of the bailees.

Storing property in a rented storage unit does not constitute bailment, and the person holding the property in the unit is not considered a bailee. Since the storage operator isn’t acting as a bailee, the renter has to insure their own belongings, and homeowners insurance often covers items kept in a storage unit.