Mississippi Property & Casualty Practice Exam

What does "No benefit to Bailee" mean in insurance terms?

1. Bailee is entitled to all benefits

2. Bailee is covered only for liability

3. Bailee is not covered while possessing insured property

4. Bailee has guaranteed coverage under all conditions

The correct answer is: Bailee is not covered while possessing insured property

The phrase "No benefit to Bailee" refers to a specific clause in certain insurance policies that ensures that the bailee, someone who temporarily holds someone else's property, does not receive coverage for their own interest in the property. This means that while a bailee may have possession of the insured property, the insurance policy does not extend benefits or coverage to them in the event of damage or loss. When interpreting this concept, it emphasizes that the insurance primarily safeguards the property owner's interest rather than that of the bailee. Thus, should an incident occur that results in loss or damage while the bailee is in possession of the property, the bailee would not be able to claim any benefits from the insurance policy for their own liability or for sustaining any loss. In the context of the given choices, the understanding that a bailee is not covered while possessing insured property highlights the limitations set forth by the insurance agreement, ensuring that the risk remains with the original owner rather than the bailee. This encapsulates the essence of "No benefit to Bailee" in the realm of insurance.