Wholesalers And Distributors Insurance FAQ

• At the minimum, wholesalers and distributors need general liability insurance.
• If they have employees they will need workers compensation in most states.
• If they have vehicles registered to the business, or use vehicles for the business purposes, they will also need commercial auto.
• There are also other specialty coverages and endorsements that might be needed based on their operations.

Package policies are the most convenient and cost effective way to combine a number of coverages in one policy. For some operations in this category, the businessowners policy may be the best choice for eligible businesses willing to exchange some coverage flexibility for reduced premiums.

Types Of Wholesalers And Distributors Package Policies:

• Businessowners Policy (BOP)
• Commercial Package Policy (CPP)

Inventory represents the largest property value for most wholesalers. Many wholesale operations have periods when these values increase dramatically and should consider the peak season or value reporting options to prevent underinsurance.

Business income is an important coverage need and business income from dependent and secondary dependent properties coverage should be considered in cases where the insured has only a few suppliers or customers.

Types Of Property Coverages:

• Building
• Business Personal Property
• Personal Property of Others
• Improvements and Betterments

Coverage on goods in transit and electronic data processing coverages are probably the most important inland marine coverages for most wholesalers. They transport and deliver most of the goods they sell and rely heavily on computers for most of their transactions and operations.

Specialty inland marine coverage forms have been created for specific dealers and should be considered in lieu of commercial property coverage forms.

Types Of Inland Marine Coverages:

• Accounts Receivable Coverage
• Camera and Musical Instrument Dealers Coverage
• Contractors Equipment Coverage
• Difference in Conditions (DIC) Coverage
• Electronic Data Processing Equipment Coverage
• Fine Arts Coverage
• Fine Arts Dealers Coverage
• Goods In Transit
• Signs Coverage
• Valuable Papers and Records Coverage

Losses due to employee theft are almost always the primary crime coverage concern. However, computer and funds transfer fraud may also be major loss and coverage concerns because most invoices and billings are handled electronically. Fraudulent impersonation coverage can be very important because of potential losses due to trickery.

Types Of Crime Coverages:

• Computer and Funds Transfer Fraud Coverage
• Employee Theft Coverage
• Forgery or Alteration Coverage
• Inside The Premises-Theft of Money and Securities Coverage
• Inside The Premises-Robbery or Safe Burglary of Other Property Coverage
• Money Orders and Counterfeit Money Coverage
• Outside The Premises Coverage

Most wholesale operations do not have significant exposures that require surety bonds. However, some types of surety bonds may be required, depending on the nature of their contracts with others or their involvement with governmental entities.

Types Of Surety Coverages:

• Miscellaneous Surety Bonds

The premises and products liability loss exposures are usually limited, except in cases where the operation imports products directly. With direct importing, the wholesaler becomes more like a manufacturer with respect to any products-related losses or damage.

Wholesalers that distribute alcoholic beverages need separate liquor liability coverage because they are subject to the liquor exclusion in the CGL.

Types Of Liability Coverages:

• Claims-Made to Occurrence Coverage
• Commercial General Liability (CGL) Coverage
• Employee Benefits Liability Coverage
• Employment-Related Practices Coverage
• Liquor Liability Coverage
• Owners and Contractors Protective (OCP) Liability Coverage
• Product Contamination Insurance
• Product Recall or Product Withdrawal Expense Coverage
• Railroad Protective Liability Coverage
• Special Events Liability Coverage

The commercial auto exposure can be significant, depending on the extent of delivery of goods to customers. If the wholesaler has no delivery operations, the exposure may not be more than a salesperson's private passenger fleet.

Types Of Business Auto Coverages:

• Auto Medical Payments
• Business Auto Coverage
• Collision Coverage
• Comprehensive Coverage
• Garagekeepers Coverage
• Hired & Non-owned Auto Coverage (HNOA)
• Uninsured/Underinsured Motorists Coverage

Employers are required to provide coverage for on-the-job injuries sustained by their employees through a workers compensation policy. Automation in many wholesale operations has dramatically reduced the number of employees but workers compensation coverage is still required for those that remain.

If the wholesale or distribution operation is located in a coastal area or along navigable waters, and workers load and unload ships or other vessels, Longshore and Harbor Workers' Compensation Act coverage is also required.

Types Of Workers Comp Coverages:

• Excess Workers Compensation Self-Insurance Bonds
• Longshore and Harbor Workers' Compensation Act Coverage
• Stop-Gap or Employers Liability Coverage
• Workers Compensation and Employers Liability Coverage

The increased limits needed are based on the types of products handled and distributed along with the contractual relationship of the wholesaler with its suppliers and customers. Higher limits are particularly important if the insured directly imports any products or does any repackaging.

Types Of Excess Liability Coverages:

• Excess Liability Coverage
• Umbrella Coverage

Depending on the unique features or peculiar characteristics of their operations, some wholesalers may have unusual exposures. One or more of the following coverages may be appropriate:

Types Of Specialty Coverages:

• American Expatriate Coverage
• Business Legal Expense Coverage
• Commercial Credit Coverage
• Cyber Liability Coverage
• Data Security Breach Coverage
• Directors and Officers Liability Coverage
• Environmental Impairment Liability Coverage
• Export Credit Insurance Coverage
• Fiduciary Liability (Pension, Welfare and Employee Benefit Funds) Coverage
• Identity Theft Insurance Coverage
• International Insurance Coverage
• Patent Infringement Liability Coverage
• Risk Retention Group Liability Coverage
• Solar Energy System Coverage
• Tax Liability Coverage
• Terrorism Insurance Coverage
• Transportation Brokers Contingent Cargo Coverage
• Underground Storage Tank (UST) Liability Coverage
• Unmanned Aerial Vehicles (UAV) (Drones)