Texas All Lines Adjuster Practice Test

Who is considered a bailee?

1. A person who owns property

2. An entity responsible for lost items

3. An individual or company receiving another's property for a special purpose

4. A party that contracts for insurance coverage

The correct answer is: An individual or company receiving another's property for a special purpose

A bailee is defined as an individual or entity that receives possession of someone else's property with the agreement to return it after fulfilling a specific purpose or task. This relationship is generally established through a contractual agreement, which outlines the responsibilities and duties of the bailee regarding the care, maintenance, and eventual return of the property. The relationship can arise in various contexts, such as when a person leaves their car at a repair shop or when goods are stored in a warehouse. The choice indicating that a bailee is "an individual or company receiving another's property for a special purpose" accurately reflects this definition. In contrast, the other options do not correctly describe the legal and practical context of a bailee's responsibilities. Ownership of property refers to a different legal status that does not involve the temporary transfer of possession intended for a specific purpose. Similarly, being responsible for lost items suggests a duty that may apply in various situations, but it does not capture the essence of a bailee's role, which is bound by an agreement concerning property possession. Lastly, contracting for insurance coverage pertains to a separate relationship involving risk management and financial indemnification, not the possession and care of another's property.