Customers leave valuable property at restaurants every day - coats at coat checks, phones on tables, laptops at coffee shop counters. When that property is damaged, lost, or stolen, who's responsible? Understanding your liability for customer property and how general liability insurance responds can help you set proper policies and manage expectations.
Restaurant Liability for Customer Property
Your legal liability for customer property depends on the level of responsibility you've assumed:
Coat Check / Valet Service (Bailment)
When you take active custody of property through a coat check, valet, or similar service, you create a 'bailment' - a legal relationship that makes you responsible for the property while it's in your care.
- Duty of care: You must take reasonable steps to protect the property
- Liability for negligence: If property is damaged or stolen due to your negligence, you're responsible
- Limitation of liability: Many restaurants post signs limiting liability - effectiveness varies by state
General Premises (No Active Custody)
For property customers bring in and keep with them (purse under the table, phone on the bar), your liability is limited:
- No bailment: You haven't taken custody, so bailment rules don't apply
- Premises liability: You're still responsible if your negligence causes damage (server spills wine on customer's coat)
- Limited duty: You're not responsible for protecting property you don't control
Common Customer Property Claims
1. Coat Check Theft or Damage
Scenario: A customer checks a $2,000 designer coat. When they retrieve it, it's stained or missing.
Liability: You created a bailment, so you're likely responsible unless you can show you exercised reasonable care.
Coverage: This is a gray area. GL policies often exclude 'care, custody, or control' claims. You may need specific bailee coverage.
2. Server Damages Customer's Property
Scenario: A server spills red wine on a customer's white silk blouse, or drops a tray on a customer's laptop.
Liability: Clear negligence on your part - you're responsible.
Coverage: Covered under GL's property damage coverage, since the property wasn't in your care, custody, or control when damage occurred.
3. Theft from Customer's Person or Table
Scenario: A customer's purse is stolen from under their table during dinner.
Liability: Generally not your responsibility unless you failed to maintain reasonable security in an area with known theft problems.
Coverage: Probably not covered - you didn't cause the loss and likely have no legal liability.
The Care, Custody, or Control Exclusion
Most general liability policies exclude coverage for property 'in your care, custody, or control.' This is significant for restaurants:
- Coat check items are in your custody
- Valet parking puts vehicles in your custody
- Stored customer property (long-term) is in your custody
For these exposures, you may need additional coverage such as:
- Bailee coverage: Covers damage to property in your care
- Garagekeepers liability: Specifically for valet parking operations
- Inland marine floater: For valuable items temporarily in your possession
Limiting Your Liability
Restaurants commonly use disclaimers to limit property liability:
- Posted signs: 'Not responsible for lost or stolen items' or 'Coat check liability limited to $100'
- Claim tickets: Limitation language printed on coat check or valet tickets
- Terms of service: For reservation systems or online ordering
Important: These limitations must be conspicuous, and effectiveness varies by state. They also don't protect against gross negligence. Consult an attorney about proper disclaimer language.
Frequently Asked Questions
Should I offer to pay for damaged customer property?
This is a business judgment. For small claims (dry cleaning a stained shirt), goodwill payments often make sense and avoid escalation. For larger claims, consult your insurer before admitting liability or making payments. Document everything regardless.
What if a customer claims we damaged something valuable?
Document the claim immediately. Ask for proof of value (receipt, appraisal). Report the claim to your insurance carrier and let them investigate. Don't admit liability or promise payment without consulting your carrier.
Do 'not responsible' signs actually work?
They provide some protection but aren't bulletproof. Courts generally uphold reasonable limitations of liability when clearly posted. However, signs won't protect you if you were grossly negligent, and some states limit enforcement of liability waivers. They're worth using but shouldn't be your only protection.