Whether you store, cross-dock, package or otherwise handle the property of others, you are a custodian, or “bailee,” and you need to protect your financial interests while dealing with that property.
Warehousing and logistics insurance is a broad term that may comprise multiple policies that can cover your liability costs for harm to others, your own property for damage it suffers, revenue lost as a result of a covered event, and your costs for cleanup. If your business both stores cargo and transports it to its final destination, you typically can add last-mile delivery insurance.
Warehouse and Logistics Legal Liability Insurance
When you store or move the property of others, you are part of an important logistics chain, and mistakes your employees make can create expensive liabilities for your company. You can transfer some of the financial risk for those errors to an insurance company under a warehouse legal liability policy. It is designed to cover incidents arising from your company’s negligence and errors.
It may be designed to cover:
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Cargo or property of others under your care, control or custody while it’s at rest,
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Cargo or property of others you are transporting by truck,
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Cargo or property of others you have hired a subcontractor to transport, and
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Cargo or property of others you are storing at a hired warehouse.
Perils may include failure to control temperature or humidity, to load or unload cargo properly, or to prevent fire, theft, or other loss events. Covered claims may include negligence in handling or storage, items that are lost or unaccounted for, and even pollutant cleanup for which you are legally responsible. This includes a situation when a fire department damages the inventory with water or foam while putting out a fire on your premises. This type of coverage can also be added as an endorsement or by buying a standalone “Inland Marine” policy.
Shelving failures, forklift accidents, drops during cross-docking, and spoilage due to failed temperature controls are all common perils that a warehouse operators’ legal liability policy can cover.
Know that most manufacturers, suppliers and shippers require warehouse operators and fulfillment centers to carry warehouse legal liability insurance as part of the service contract. Each policy is written based on your company’s particular operations and risks.
To insure cargo you store from non-negligence perils, such as fire, wind, theft, burst pipes, or vandalism, you may wish to ask your agent about a warehouse stock insurance or inventory insurance policy.
Insurance for Your Warehouse or Logistics Business Property
Commercial property insurance helps pay for damage to your building structures, business equipment, and other building contents, such as shelving, tracks, and personal protective gear. It typically includes loss from fire, water (flood may be separately insured), vandalism, theft, explosion, wind (this may include a separate deductible), and lightning. Leasing your space? A policy can also be written to cover fixtures or equipment you install.
An add-on, or “endorsement,” to your warehouse operators and logistics commercial property policy can cover losses stemming from the breakdown of your equipment. While some policies include equipment breakdown coverage automatically, it’s best to inquire, because some insurance companies offer it only as an endorsement. It’s an important coverage that helps cover lost revenue and damage resulting from equipment failure.
Business income, or business interruption, coverage is another protection you can have added to your commercial property policy. It helps replace lost revenue after a fire or other covered event. You can use it to make payroll and cover other expenses associated with operations while repairs are made. For a little extra premium, you can cover:
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Extra expenses, such as renting a new space while yours is unusable,
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Utility service failure, such as a loss of electricity due to an explosion at the supplier’s premises, and
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Civil authority closures, such as evacuations or road closures.
You should also ask about coverage for your mobile equipment, such as forklifts, utility vehicles, cranes, and cherry pickers, for example. These are not covered under commercial auto insurance.
Commercial Auto Insurance for Warehouse & Logistics
If you are transporting the property of others via truck or van to your storage facility, you will need commercial auto insurance. Get collision, liability, and non-collision coverages for the fullest protection.
For businesses that both store and deliver products, such as providing last-mile delivery services from your warehouse or distribution center, a special kind of insurance is available that blends vehicle and cargo coverages. It is called last-mile delivery insurance, and it helps pay for injuries, damage to vehicles, and loss of cargo resulting from a covered event.
Workers Compensation Insurance for Warehouse & Logistics
The logistics and warehousing industry is a high-injury sector. Workers compensation insurance rules vary by state, so work with an agent who knows the law in all the areas you operate. Workers compensation insurance protects your company from devastating financial liabilities for medical payments, disability, or fatality. Your insurance provider will work with you to implement a loss-control plan that includes both safety and claims management.
Product Liability Insurance for Warehouse & Logistics
Companies that repackage, label or otherwise adjust a product or its packaging or that store temperature-controlled products can be drawn into product liability claims and lawsuits. Those handling consumable products such as food, beverages, and pharmaceuticals are most at risk. Even if your operations were not the cause of a product-based injury, you may have to hire lawyers to defend your company. Product liability insurance helps pay for investigations and legal defense as well as compensation if you are found liable for injuries.
Excess and Umbrella Insurance for Warehouse & Logistics
Depending on the size of your business and your involvement in trucking goods or handling hazardous materials, you may have a need for higher limits of liability coverage than a primary insurance policy offers. Commercial truck accidents and pollution incidents are notoriously expensive, even running into the tens of millions of dollars. A primary liability policy typically covers far less.
The solution is to add a layer of insurance above the liability policies you carry. You can do so through either an excess liability insurance policy for warehouses and logistics providers or through an umbrella policy. An excess liability policy typically follows the terms of your underlying liability agreement but adds potentially millions of dollars in protection. An umbrella policy can not only add dollar amounts to your coverage but also will cover multiple underlying policies. Your insurance agent will help you determine which type of coverage is more beneficial
A Final Word About Subcontracting
Many warehousemen and logistics companies sub out some of their work, especially transport of goods and overflow storage even if just temporarily. Talk to your insurance agent about all your contracts, including your subcontracts, to see whether you are taking on uncovered liabilities. Although manufacturers and shippers do carry insurance to protect their investment in their cargo, warehouse and logistics operators need to guard against financial losses from lawsuits alleging negligence or fault for product damage and injury to others.
Connect with an Independent Agent
An insurance agent specializing in warehousing and logistics insurance can provide excellent advice on coverage as well as offer tried-and-true risk management services or guidance. Take advantage of their expertise to reduce accidents, claims and lawsuits. The resulting impact on your insurability should improve your insurance terms and costs and lead to ongoing brand trust.Find a warehousing and logistics insurance agent near you.