Inside This Article:
- A three-alarm fire at Baltimore’s historic “Castle on Keswick” building caused extensive water damage that destroyed wedding gowns and other property at Jill Andrews Gowns.
- The loss included client-owned items stored for fittings and alterations, raising concerns over who is financially responsible for damaged heirlooms.
- Commercial Property Insurance may not cover customers’ belongings, making specialized policies such as Bailee’s Coverage critical for businesses that take possession of client property.
- Older and historic buildings can present added insurance challenges — including higher restoration costs and stricter policy requirements — underscoring the importance of reviewing coverage closely.
A bridal gown shop suffered extensive damage after a three-alarm fire at the historic “The Castle at Keswick” building in Baltimore, Maryland. According to reports, the Nov. 10 fire was mainly contained to the third floor, but fire suppression efforts caused significant water damage to the first-floor bridal shop, destroying wedding gowns and other items.
The shop, Jill Andrews Gowns, was one of several small businesses affected by the fire and resulting water damage, which ruined furniture, flooring, fabrics, and customer property, CBS News reported. A GoFundMe set up for the business noted that “the loss is total and completely overwhelming,” with jewelry, hand-sewn gowns, and “irreplaceable materials” all destroyed.
“Water is one of the biggest sources of damage claims, especially large claims,” said Nathan Durden, Underwriter, Commercial Insurance, Burns & Wilcox, Baltimore, Maryland. “In this case, it was water from the firefighters, and sometimes it is a sprinkler system. Smoke damage can also be significant.”
Water is one of the biggest sources of damage claims, especially large claims.
For business owners storing customer property — like bridal gowns for fittings or alterations — insurance coverage for those items is an important consideration. While Commercial Property Insurance can help pay for building repairs and damaged business property after a fire loss, items owned by customers may be excluded and require specialized insurance known as Bailee’s Coverage.
“Anytime you have a great loss to your business, it is going to be devastating, but especially in a case like this where you have clients’ merchandise inside,” said Aubrey Salonen, Senior Underwriter, Commercial Insurance, Burns & Wilcox, Houston, Texas. “From a shop owner perspective and an individual perspective, that can be really devastating.”
Anytime you have a great loss to your business, it is going to be devastating, but especially in a case like this where you have clients’ merchandise inside. From a shop owner perspective and an individual perspective, that can be really devastating.
The risk of insurance gaps when client property is involved
More than 100 firefighters responded to the fire at the 126-year-old building and reportedly faced gusty winds that made fire suppression efforts more difficult, CBS News reported. The bridal shop owner, Jill Andrews, told news outlets that it was “surreal” seeing the studio flood, knowing she had “precious family heirlooms” she had been entrusted with inside. The fire took place just days before the business’s 16th anniversary.
According to Salonen, businesses that store others’ property should carry Commercial Property Insurance with specific endorsements, such as Bailee’s Coverage, to ensure those items are covered in the event of a fire or other incident. “If you have property that does not belong to you that you are performing a service on, such as wedding dresses in this case, that coverage could kick in in the event of a covered loss,” she said.
It is not automatically included in a Commercial Property policy, however, Salonen emphasized. “You would need to ask for it,” she said. “If you have any kind of business items that belong to others, make sure you ask your insurance broker for that coverage.”
In addition to bridal shops, other businesses that may need this type of insurance include auto repair shops, dry cleaners, and jewelers, she said. In September, a fire at an auto shop in Monroe, Georgia, caused major structural damage to the building and the total loss of several vehicles housed inside. In April, a dry cleaning business in Chicago was destroyed in a fire that caused the building’s roof and ceiling to completely collapse.
Without Bailee’s Coverage, owners may need to reimburse customers for the full cost of replacement — a liability that can range from thousands to hundreds of thousands of dollars depending on the value and volume of items stored on the premises that are lost.
“Someone with a newer business might not have thought about that before,” Durden said, adding that written agreements should also be used when storing customer property. “Bailee’s Coverage is something they should want in addition to having written agreements or waivers in place. Some policies will bundle coverage and in other cases it might need to be a separate policy.”
The challenges of insuring historic property
When historic buildings like the Castle on Keswick are damaged in a fire, severe weather event, or other property loss, repair costs can be higher than usual and insurers may require additional forms to ensure these properties are properly protected, Durden said. After the historic Morgan-Manning House in Brockport, New York, was significantly damaged in a January fire, sources said it could take multiple years and about $4.9 million to restore the community landmark, News10NBC reported.
“Historic buildings can be more expensive to renovate following a claim because they may have to follow certain standards to restore it to the same historic appearance,” Durden said.
Historic buildings can be more expensive to renovate following a claim because they may have to follow certain standards to restore it to the same historic appearance.
With historic buildings, Salonen added, “always let your agent know upfront.”
“If you do not declare that information during the quote process, then you may have problems during the claim process,” she said. “Some carriers prohibit historical buildings.”
Business owners should also understand how their insurance would respond to water damage following a fire, as some policies may have higher deductibles or sublimits for water damage, Durden said. “All other perils might be a standard $2,500 deductible, for example, but water damage could be $10,000, especially if there is a history of water claims,” he said.
How small businesses can protect their property
Severe storms are another major risk for commercial properties, causing billions of dollars in damages each year. With that in mind, deductibles for perils such as wind and hail damage should also be reviewed, Salonen said. “In coastal Texas, a lot of what I see are wind and hail claims,” she said.
When seeking Commercial Property Insurance, it is important to disclose all details about the business and its operations during the underwriting process. “Always review your policy and talk to your agent,” Durden suggested.
To reduce the risk of facing an uninsured loss, Salonen said it is best for business owners to work with an experienced insurance broker and avoid purchasing a policy online.
“Have a really good sit-down talk with your insurance agent and ask them to help you assess your risk. They will help you identify anything additional that you need at that time,” she said. “Never assume something is covered.”
Have a really good sit-down talk with your insurance agent and ask them to help you assess your risk. … Never assume something is covered.
