Wholesalers and distributors keep stores running and our products moving, but when it comes to risk, are you protected from major financial losses due to theft, auto accidents, weather, and product defect claims? An insurance portfolio — whether from one insurance company or several — can keep you financially sound. Here, are some of the main coverages and a few ways you can bundle them for convenience and, potentially, savings.
Property insurance for wholesalers and distributors
Your business relies on your buildings, their contents and the inventory or stock you store or move, so your property insurance should reflect the dynamic nature of your operations. Let’s look at the basic policies your wholesale or distribution business should consider.
Commercial property insurance policy for wholesalers and distributors
A commercial property policy protects your investment in your offices, buildings and building contents, like equipment and fixtures. It responds in the event of damage or destruction from fire, explosion, vandalism, theft, water intrusion (but not flood), and weather disasters.
Some policies also cover inventory, so ask your insurance agent or broker whether inventory is included or must be treated specially because it often fluctuates in value and type. If your inventory expands and contracts seasonally, you will also have coverage options to reflect the variations in insurable value.
If you lease your space, your landlord should insure the building, but you will need (usually under your contract) to insure any betterments, fixtures, and equipment within the walls. You should also consider sewer and drain backup coverage in case you have a nasty plumbing incident that damages your property.
What if your business causes damage to the building you are renting? If you have “Damages to Premises Rented to You” added to your policy, this will provide coverage in the event of a fire, explosion, or accident to reimburse the landlord for the cost of repairs.
If you own your building, you may want to get law and ordinance insurance added to your commercial property policy. That helps pay for repairs necessitated by modern building codes after a covered event, even to parts of the building that weren’t damaged.
You can also add business income protection to your commercial property policy. It guarantees a flow of income when a covered loss forces a meaningful shutdown of your operations and resulting cessation of revenue. This addition or endorsement can be written to provide coverage for extra expenses, such as rental of a new space or equipment while your damaged property is being repaired or replaced.
Equipment breakdown insurance for wholesalers and distributors
Although a commercial property policy will cover loss of equipment due to fire, theft or other disasters, it doesn’t insure you for mechanical failures or motor burnouts that halt workflow. For that risk, you need equipment breakdown insurance. It covers not only repairs or replacement of failed equipment but also loss of income that results. It can insure things like refrigerators, conveyor belts, wrappers, and boxing and labeling machines, among many other interior processing systems. It can also insure computers and computerized equipment. For wheeled or tracked vehicles used outdoors but not on public roads, you will likely need a separate inland marine policy for mobile equipment. Know that wear and tear and failure to maintain equipment are not covered causes of loss.
Cargo insurance and goods in transit insurance for wholesalers and distributors
These coverages protect the value of goods being shipped. Cargo covers your company for product losses when hauling, loading, or unloading goods owned by a client. Goods in transit insurance covers your own inventory while it’s being transported between locations. These are flexible policies that reflect the value of what you are carrying as well as the routes you are traveling. If you use third-party carriers to move goods to their final destination, your insurance needs will be more complicated, so work with your insurance agent or broker on covering the journey of your goods from your premises to the retailer or purchaser.
Crime insurance for wholesalers and distributors
One of your primary jobs is to facilitate financial transactions between manufacturers, retailers and you. As a result, you house and handle scads of vital information that make you a target of embezzlers and thieves. Crime insurance can protect your business, as well as your customer’s businesses, from such losses through first-party and third-party coverage under a fidelity bond. You can also enhance your crime-loss protection through cyber insurance.
Liability insurance for wholesalers and distributors
All businesses have a need for commercial general liability insurance, which helps cover payments owed to non-employees who are hurt on your premises or who are injured in non-automobile accidents resulting from the course of your work off your premises. But when you deal with product custody or distribution, you have broader liability risks. Those can include product liability and pollution liability, among others. Here are some of the primary liability concerns wholesalers and distributors face.
Product liability insurance for wholesalers and distributors
From failure to control temperatures to errors in repackaging, labeling and light assembly, distributors and wholesalers have varying degrees of exposure to product liability claims. If a consumer is harmed by a product you have stored, handled, or transported, you could be drawn into a personal injury lawsuit alleging product defect. These are often expensive claims. Product liability insurance can provide financial protection, covering legal fees and compensation to victims.
In a similar vein, product recall insurance can protect your wholesale or distribution business from the significant costs of recalling and removing products from shelves. It can help pay for notifications, refunds, removal, and disposal.
Pollution and environmental liability insurance for wholesalers and distributors
If you are handling, storing, or transporting fuels, chemicals, pharmaceuticals or gases, you should consider pollution liability insurance. It provides assistance when you are liable for the costs of cleanup, remediation, notification, or containment of a release of fumes, liquids, or solids that damage the environment or have the potential to make people ill.
Commercial auto insurance for wholesalers and distributors
Since many wholesalers and distributors own fleets of trucks to handle the transport of goods, commercial auto insurance is a must-have coverage. It comprises property damage and liability protections.
On the property side, you can cover damage to your vehicles that occurs in collisions as well as damage done by flood, fire, hail, vandalism, and strikes by non-vehicular objects. The latter list, along with theft, is covered under comprehensive insurance, which must be elected at the time you purchase your policy.
You can also add property damage protection for accidents where an at-fault driver is uninsured. This coverage, called uninsured motorist coverage, protects you from repair costs or a total loss when the at-fault driver cannot pay.
Probably the biggest concern for commercial auto owners and operators is auto liability risk. A commercial auto liability insurance policy will cover what you owe to fix or replace someone’s vehicle damaged in an accident as well as victims’ medical costs if they are injured. Because of the extremely high costs associated with truck accidents, commercial auto liability insurance can be expensive, but you can control costs by insisting upon good driving records for your operators, vetting all drivers before hiring or allowing them to handle a vehicle, and taking care of your trucks so they are road-worthy.
Fleet insurance is designed to cover all your vehicles, including trucks, pickups and cars. If you travel across state lines, advise your insurance agent or broker so you can comply with all state laws on trucking.
Workers compensation insurance for wholesalers and distributors
Falls from heights, auto accidents, crush injuries and musculoskeletal strains are common in the wholesale and distribution sectors, especially for new employees. Workers compensation insurance provides medical treatment, rehab and return-to-work programs along with partial wage replacement. It can also cover long-term problems such as disability.
Laws and benefits vary by state, so your insurance agent or broker will help you know your duties and comply with the rules. The good news is safety programs have been shown to reduce the frequency and severity of claims and keep wholesalers and distributors from suffering regulatory penalties.
Cyber insurance for wholesalers and distributors
As a wholesaler or distributor, you are heavily reliant on internet-connected devices and systems — from financial transactions to route scheduling to inventory management and even equipment operation. Cyber insurance is almost indispensable.
Its first-party coverage element helps recover or buy back your data if it is stolen and can be written to assist with the expenses of restoring systems that are damaged by a hacker and lost income due to downtime caused by a covered cyber event. It may also be designed to cover financial losses resulting from impersonation, fraudulent orders or instructions, and criminal misdirection of funds, among other cybercrimes that steal your money.
Third-party coverage helps with compensation you owe to victims due to criminal cyber intrusions into your systems or exfiltration of their data. It may also cover the costs of victim notification and public relations.
Most cyber insurers offer valuable cybersecurity services that improve your ability to thwart attacks, and many require basic cyber hygiene such as network access controls, employee training and disaster response plans. Be prepared to demonstrate your cyber efforts and avail your company of the cybersecurity perks.
The value of professional insurance advice for wholesalers and distributors
You have many options for protecting your wholesale or distributor business. For example, you can bundle basic off-the-shelf policies in a program insurance policy and tack on missing coverages to round out coverage. Program insurance is a set of policies designed specifically for the risks you face in your sector. It is crafted by experts in wholesaling and distribution and is meant to reduce the complexities of choosing coverage while providing broad protections. You may instead wish to craft a package policy with a single insurer you have come to trust that will provide multiple vital coverages. Alternatively, you may wish to get — or need to get, based on insurer availability — stand-alone policies from various insurance companies.
An independent insurance agent or broker can help you navigate wholesaler and distributor insurance options, walking you through your choices and helping you understand how each works with your budget and business contracts with manufacturers, retailers, and customers or shippers. Find a wholesaler and distributor insurance agent near you.