Warehouse Insurance Explained in 5 Minutes

Commercial warehouses may have a fairly simple business model: house and protect customers’ goods for a fee. In reality, warehouse owners have to consider numerous variables that can negatively impact their own livelihood as well as the materials stored on their premises.

Warehouse owners must carefully assess the risks they face every day and work closely with an independent insurance agent to find the best ways to mitigate them.

Warehouse Insurance Varies. What Type of Coverage Do You Need?

Protecting your buildings and what’s inside are the ultimate goals for any warehouse owner. After all, your building and the items stored in them are your business. The precise type and amount of coverage you need depend on the type of structure you own, the kind of items you store inside and the way you handle those items. Are the items highly flammable? Do you have effective security and sprinkler systems? Do you protect stored items from infestation, water and temperature variations?

All of these variables can play a role in causing damage to the goods you have agreed to store and protect.

Warehouse Owners Need Property and Liability Insurance

While the purpose of your business is to store and protect other people’s property, you need to first secure your own. With warehouse business property insurance, you can protect your buildings, their contents, your grounds and other structures from damage due to fire, weather, smoke, theft and other causes of loss. Business property insurance protects your assets, including office equipment, computers, furniture, tools and equipment. 

You may also need commercial general liability coverage, like any business, in order to protect your customers or the general public who may be on your premises from accidents, injuries and property damage caused by your negligence.

Warehouse Legal Liability Coverage Protects the Goods You Store

Warehouse owners assume responsibility for their customers’ goods for a fee. Typically, the warehouse owner is expected to provide “reasonable care” for the stored goods. If, however, the warehouse owner is negligent in some manner that results in damage to the customers’ property, the warehouse owner can be held liable for the loss.

Warehouse liability claims can result from any of these causes:

  • Theft
  • Fire
  • Flood 
  • Temperature variations 
  • Roof collapse 
  • Missing items
  • Shipping and handling 
  • Improper facility maintenance
  • Infestations

If your negligence leads to one of these circumstances, you can be held liable and can even be sued. You need insurance coverage that pays for your customers’ damaged, lost or stolen property. 

Some insurance companies offer warehouse legal liability insurance (sometimes referred to as bailee’s coverage), a policy specifically designed to protect warehouse customers. And remember, while warehouse legal liability insurance is applicable in cases where you are negligent, your customers must insure their goods stored in your warehouse for other types of losses (fires, windstorms) that are not caused by your negligence.

Warehouse legal liability insurance can be complex and may exclude certain occurrences based on the legal agreements you have in place with your customers. A knowledgeable independent insurance agent who has experience working with warehouse insurance can help you find the best coverage options for your specific business.

Other Warehouse Insurance to Consider

Warehouse owners may want to consider these additional business insurance policies:

How to Find the Best Warehouse Insurance Coverage

Without fail, warehouse owners need comprehensive warehouse insurance programs that address the specific risks to your business and your customers. Many insurance companies offer special packaged policies designed specifically for the unique needs of warehouses.

Remember, don’t simply accept the first quote you receive. Shop around with the help of an independent insurance agent who works with multiple reputable insurance companies that specialize in warehouse insurance. The better your insurance coverage, the more likely your customers will feel safe entrusting their belongings to you.

Now, who's ready to get their insurance problems solved?