The wholesale distribution industry is growing quickly. In fact, in 2012, this industry grew faster than the overall U.S. economy, according to Tom Gale, publisher of Modern Distribution Management. The total revenues of wholesale distributors grew to $4.9 trillion in 2012, up 5.1 percent from the year before. In particular, motor vehicle and motor vehicle parts wholesale distributors as well as construction and building material wholesalers showed the most growth that year.
Wholesalers are an integral part of the U.S. economy, providing a substantial percentage of all the goods sold by retailers. Wholesalers aggregate goods from sources all over the world and make them available to retailers by a number of means. Whatever the method, few retailers could survive without having a source of products through the wholesale market. If you're entering this business or wondering if your current insurance coverage protects you from the financial risks you face, it might be time to learn a bit more about insurance coverage for wholesalers.
The Department of Commerce provides the following information on wholesale activity:
There are a number of insurance products commonly needed by almost every business:
These products represent the core needs of most businesses, large or small. There are other areas of insurance which may be optional as well, including:
Your agent will recommend some combination of these types of coverage, which will form the foundation of your insurance protection. Regardless of the coverage needed, evaluating quotes from various insurance companies and designing the right wholesale insurance plan requires knowledge and skill.
Wholesalers, manufacturers, and warehousing companies share certain business concerns. The most important of these is the protection of inventory and goods in transit.
Inventory on premises can fluctuate dramatically, particularly in a business with products with a seasonal demand. How do you ensure that you are covered for the peak periods, without having to pay an insurance premium based on the highest inventory level year-round?
The best solution to this issue is what is called a monthly reporting inventory form. You can use this form to monitor inventory levels throughout the year. Instead of paying a premium based on the highest inventory level, you report the inventory on hand and pay a premium based on your actual exposure to risk.
Getting the right coverage for goods in transit can become very complicated. Here are two examples:
Even domestic shipments present challenges and risks for your business. If you have a wholesale business, it is critical to work with a qualified agent to ensure that you address these risks with the appropriate coverage.
When you are seeking wholesale insurance, be sure to think through the various risks you face as a buisness owner as well as those for your property, your employees, inventory, equipment and other investments. By doing so, and working with an independent agent who specializes in commercial insurance, you can ensure that you do not have any insurance gaps that could compromise your financial well-being.
Here are some additional considerations for wholesalers:
Managing a complicated business is challenging, especially when it comes to risk management. You may have financial exposure in many areas: real and personal property, large inventories, a fleet of trucks and goods in transit in many places and by many means.
By choosing a qualified insurance agent, you'll have the peace of mind that your liabilities and risks are being properly managed. If you're looking for more guidance, consider talking to a financial planner or accountant and also a lawyer to help you understand your liabilities and assets and how best to structure protection for them.