Clothing Wholesaler Distributor Insurance Policy Information
Clothing Wholesaler Distributor Insurance. As a clothing distributor or wholesaler, you go to great lengths to ensure that your employees are properly trained and working the safest environment, and that orders are properly filled and goods are delivered promptly.
However, despite your best intentions, unexpected events can occur, which could put you in serious financial trouble.
Clothing wholesalers receive children's, men's, and women's apparel from foreign or domestic manufacturers, usually by truck, for distribution to clothing stores, custom boutiques, department and discount stores, haberdasheries, and other retail establishments.
Stock may include accessories or specialty items such as coats, hats, hosiery, lingerie, or wedding dresses. The distribution center may be open 24 hours a day. Generally, the products are delivered to the customer on the distributor's vehicles.
As the owner of your clothing wholesale supply or distribution center, you are liable for a wide-range of risks. These risks can include:
- Property damage
- Personal injuries
- Employee injuries and illnesses
These are just some of the examples of the issues that can occur. Being that you are liable, if something should go awry, you may be legally responsible for any damages.
Medical bills, repairs, legal fees; these expenses can really add up, which is why it's important to carry the right type of clothing wholesaler distributor insurance.
Clothing wholesaler distributor insurance protects your business from lawsuits with rates as low as $47/mo. Get a fast quote and your certificate of insurance now.
Below are some answers to commonly asked clothing wholesaler & distributor insurance questions:
- What Is Clothing Wholesaler Distributor Insurance?
- How Much Does Clothing Wholesaler Distributor Insurance Cost?
- Why Do Clothing Wholesalers And Distributors Need Insurance?
- What Type Of Insurance Do Clothing Wholesalers And Distributors Need?
- What Does Clothing Wholesaler Distributor Insurance Cover & Pay For?
What Is Clothing Wholesaler Distributor Insurance?
Clothing wholesaler distributor insurance is a type of insurance coverage designed for businesses that buy, store, and distribute clothing products for resale to retailers or directly to consumers. This insurance protects the wholesaler against financial losses caused by events such as fire, theft, damage, or loss of inventory. It may also provide liability coverage in case of any third-party claims or lawsuits arising from the sale or distribution of the clothing products.
Clothing wholesaler distributor insurance is essential for businesses that rely on the availability of stock to maintain their operations and protect against financial losses.
How Much Does Clothing Wholesaler Distributor Insurance Cost?
The average price of a standard $1,000,000/$2,000,000 General Liability Insurance policy for small clothing wholesaler distributor businesses ranges from $47 to $79 per month based on location, size, revenue, claims history and more.
Why Do Clothing Wholesalers And Distributors Need Insurance?
Insurance acts as a financial security blanket, of sorts. You pay certain fee (a premium), and in return, should something go wrong and you are responsible, your insurance company will pay for the costs that are associated with any damages, repairs, medical bills, and in some cases even legal defense fees.
Without clothing wholesaler distributor insurance, you would have to pay for such expenses out of your own pocket; expenses that could be financially crippling.
Having the proper insurance coverage assures that you will be able to cover expenses that you are liable for; in other words, business insurance can help you avoid serious monetary losses.
What Type Of Insurance Do Clothing Wholesalers And Distributors Need?
The specific type of clothing wholesaler distributor insurance you should carry will depend on a several factors; however, in general, some of the key policies that clothing wholesalers should carry include the following:
- General Liability: This type of policy protects you from any third-party personal injury and property damage claims. It covers any related legal fees and damages that you are responsible for paying if a vendor slips and falls on your property, sustains an injury, requires medical care, and files a lawsuit against you, for example.
- Product Liability: Should any of the products you supply cause an illness or an injury, product liability coverage will protect you from any related legal expenses and damages that you may be required to pay.
- Commercial Property: This type of policy covers your warehouse and the contents that are housed within it, including inventory, equipment, supplies, and furnishings from certain acts of nature, vandalism, theft, and more.
- Business Interruption: If a pipe busts in your facility and you are forced to shut down while repairs are made, business interruption insurance will cover the cost of any monetary losses that you may incur while you are closed for business.
These are just some of the types of clothing wholesaler distributor insurance coverage you should carry. You can carry individual policies, or opt for a commercial package policy that combines several different types of coverage under a single policy.
Clothing Wholesale Distributor's Risks & Exposures
Premises liability exposure is limited due to the lack of public access to the storage facilities. Customers should be confined to specific areas that are kept clean, dry and free of obstacles. Parking lots and sidewalks need to be in good repair with snow and ice removed, and generally level and free of exposure to slips and falls.
If customers pick up goods, loading docks must be clearly marked and user-friendly. There should be a disaster plan in place for unexpected emergencies.
Contracts with transportation and storage providers may expose the operation to additional liability. Railroad sidetrack agreements pose additional concerns. If there is a railroad sidetrack or dock, an employee must verify that no one is in the path of an incoming or outgoing train.
Railroad tracks and conveyors can be attractive nuisances. The premises should be enclosed by fencing with "No Trespassing" signs posted.
Products liability exposures are low if products are all from domestic manufacturers. Direct importing of stock can increase the exposure to that of a manufacturer.
Workers compensation exposure is very high. Back injuries, hernias, sprains, and strains can result from lifting. Workers should be trained in proper lifting techniques and have conveyances available. Shelving must be stable to prevent stored goods from falling onto workers.
Forklift operators must be properly trained. Continual standing can result in musculoskeletal disorders of the back, legs, or feet. Floor coverings or coatings in the warehouse may pose slip and fall hazards.
Housekeeping is critical. When work is done on computers, employees are exposed to eyestrain, neck strain, and repetitive motion injuries including carpal tunnel syndrome.
Cleaning workers can develop respiratory ailments or contact dermatitis from working with chemicals. Drivers of delivery vehicles may be confronted by robbers, injured in automobile accidents, or be injured at customers' premises.
Property exposure is high due to multiple ignition sources, open construction, and the combustibility of clothing and accessories. Ignition sources include electrical wiring, heating, and cooling systems and equipment. All wiring must be well maintained and up to code for the occupancy.
Should a fire occur, the stock and its packaging materials provide a combustible fire load that is highly susceptible to water and smoke damage. High-end women's clothes and lingerie have the least salvage potential due to its seasonality and types of fabric. Dust generated by fabrics can increase the fire load.
Good housekeeping and fire controls are critical. All stock should be racked and stored on shelves. There should be wide aisle space and limited stockpiling to prevent the spread of fire. Smoking should be prohibited.
If there is a sprinkler system, heads must be located high enough to avoid accidental contact with forklifts.
Recharging of forklifts and maintenance of vehicles should be done in a separate, ventilated area away from combustibles. Certain items, such as "name" brands or leather outerwear, are very attractive in the marketplace.
There should be adequate theft control including alarms, guards, lighting, fencing, and other security precautions as appropriate to the location.
Business interruption exposures are moderate. While backup facilities are generally available, replacement stock may be difficult to obtain quickly for distribution to retailers for their peak times such as back-to-school and Christmas.
Inland marine exposure is from accounts receivable if the distributor offers credit to customers, computers for tracking inventory, contractors' equipment, goods in transit, and valuable papers and records for manufacturers' and customers' records. Duplicates must be kept of all data to permit easy replication in the event of a loss.
Contractors' equipment includes forklifts and hand trucks used for moving stored items. While goods may come to the warehouse via contract or common carriers or trains, goods are generally delivered to retailers on trucks owned by the distributor.
Goods in transit are subject to loss from collision or overturn. Due to the potential for theft, vehicles should be unmarked, have alarms, and be attended at all times. Sales representatives may carry sample stock to retailers.
Crime exposure is from employee dishonesty. Background checks, including criminal history, should be performed on all employees handling money. Warehouse operations involve a number of transactions and accounts that can be manipulated if duties are not separated. There must be a separation of duties between persons handling deposits and disbursements and reconciling bank statements.
Regular audits, both internal and external, are important in order to prevent employee theft. High-end and "name" brand clothing items are attractive because of their high street value. Good security systems should be in place to discourage employee theft. Physical inventories should be conducted at least annually.
Commercial auto exposure is moderate for the salespersons' fleet and delivery vehicles. There should be written policies on personal and permissive use of any vehicles provided to employees. All drivers must be well trained and have valid licenses for the type of vehicle being driven.
MVRs must be run on a regular basis. Random drug and alcohol testing should be conducted. Vehicles must be well maintained with records kept in a central location.
What Does Clothing Wholesaler Distributor Insurance Cover & Pay For?
Clothing Wholesalers and Distributors can face a variety of lawsuits due to various reasons. Here are some common reasons and how insurance can help protect them:
Product Liability: If a customer is injured or harmed due to a defect in the clothing item, the wholesaler or distributor can be held responsible. In such cases, Product Liability Insurance can help cover the cost of legal defense, settlement, or judgment.
Copyright Infringement: If a wholesaler or distributor is accused of selling clothing items that violate another company's intellectual property rights (e.g., using a patented design or copyrighted logo), they can face a lawsuit. Intellectual Property Insurance can cover legal fees, settlement costs, or damages awarded in court.
Breach of Contract: If a wholesaler or distributor fails to deliver the products on time, in the agreed-upon quantity or quality, they can be sued for breach of contract. Commercial General Liability Insurance can help cover the costs of defending against these claims and any damages awarded.
Employment Practices Liability: Allegations of discrimination, harassment, or wrongful termination by employees can lead to lawsuits. Employment Practices Liability Insurance can cover the legal fees, settlement costs, or damages in such cases.
Property Damage: If a wholesaler or distributor's property (e.g., warehouse, office) is damaged due to fire, theft, or natural disasters, they may face a lawsuit from third parties affected by the damage. Commercial Property Insurance can help cover the costs of repairing or replacing the damaged property and any legal expenses resulting from the lawsuit.
Workers' Compensation Claims: If an employee is injured on the job, the wholesaler or distributor can be held responsible. Workers' Compensation Insurance can cover medical expenses, lost wages, and any legal fees associated with defending against such claims.
Errors and Omissions: If a wholesaler or distributor is accused of providing inaccurate or misleading information about a product, they can be sued for professional negligence. Errors and Omissions Insurance can cover the legal defense costs and any damages awarded in court.
By having the appropriate insurance policies in place, Clothing Wholesalers and Distributors can protect themselves from the financial burden of lawsuits, allowing them to focus on their core business operations.
Commercial Insurance And Business Industry Classification
- SIC CODE: 5136 Men's and Boy's Clothing And Furnishings, 5137 Women's, Children's, And Infants' Clothing and Accessories
- NAICS CODE: 424320 Men's and Boys' Clothing and Furnishings Merchant Wholesalers, 424330 Women's Children's and Infants' Clothing and Accessories Merchants Wholesalers
- Suggested Workers Compensation Code(s): 8032 Store - Dry Goods - Wholesale
Description for 5136: Men's and Boy's Clothing And Furnishings
Division F: Wholesale Trade | Major Group 51: Wholesale Trade-non-durable Goods | Industry Group 513: Apparel, Piece Goods, And Notions
5136 Men's and Boy's Clothing And Furnishings: Establishments primarily engaged in the wholesale distribution of men's and boys' apparel and furnishings, sportswear, hosiery, underwear, nightwear, and work clothing.
- Apparel belts, men's and boys'-wholesale
- Beachwear, men's and boys'-wholesale
- Caps, men's and boys'-wholesale
- Clothing, men's and boys'-wholesale
- Coats, men's and boys'-wholesale
- Furnishings, except shoes: men's and boys'-wholesale
- Gloves (all materials), men's and boys'-wholesale
- Handkerchiefs, men's and boys'-wholesale
- Hats, men's and boys'-wholesale
- Hosiery, men's and boys'-wholesale
- Leather and sheep-lined clothing, men's and boys'-wholesale
- Mittens, men's and boys'-wholesale
- Mufflers, men's and boys'-wholesale
- Neckwear, men's and boys'-wholesale
- Nightwear, men's and boys'-wholesale
- Outerwear, men's and boys'-wholesale
- Overcoats, men's and boys'-wholesale
- Raincoats, men's and boys'-wholesale
- Robes, men's and boys'-wholesale
- Scarves, men's and boys'-wholesale
- Shirts, men's and boys'-wholesale
- Sportswear, men's and boys'-wholesale
- Suits, men's and boys'-wholesale
- Ties, men's and boys'-wholesale
- Trousers, men's and boys'-wholesale
- Umbrellas, men's and boys'-wholesale
- Underwear, men's and boys'-wholesale
- Uniforms, men's and boys'-wholesale
- Waterproof outer garments, men's and boys'-wholesale
- Work clothing, men's and boys'-wholesale
Description for 5137: Women's, Children's, And Infants' Clothing and Accessories
Division F: Wholesale Trade | Major Group 51: Wholesale Trade-non-durable Goods | Industry Group 513: Apparel, Piece Goods, And Notions
5137 Women's, Children's, And Infants' Clothing and Accessories: Establishments primarily engaged in the wholesale distribution of women's, children's, and infants' clothing and accessories, including hosiery, lingerie, millinery, and furs.
- Apparel belts: women's and children's-wholesale
- Baby goods-wholesale
- Caps and gowns: women's and children's-wholesale
- Caps: women's and children's-wholesale
- Clothing accessories: women's, children's, and infants'-wholesale
- Clothing. women's, children's, and infants'-wholesale
- Coats: women's, children's, and infants'-wholesale
- Coordinate sets: women's, children's, and infants'-wholesale
- Fur clothing-wholesale
- Furnishings, clothing except shoes: women's, children's, and
- Gloves, (all materials): women's, children's, and infants'-wholesale
- Handkerchiefs: women's and children's-wholesale
- Hats: women's, children's, and infants'-wholesale
- Hosiery: women's, children's, and infants'-wholesale
- Hospital gowns: women's and children's-wholesale
- Infants' wear-wholesale
- Karate uniforms: women's and children's-wholesale
- Ladies' handkerchiefs-wholesale
- Ladies' purses-wholesale
- Leather and sheep-lined clothing women's and children's-wholesale
- Mittens: women's, children's, and infants'-wholesale
- Nightwear: women's, children's, and infants'-wholesale
- Outerwear: women's, children's, and infants'-wholesale
- Purses: women's and children's-wholesale
- Raincoats: women's and children's-wholesale
- Robes and gowns: women's and children's-wholesale
- Scarves: women's, children's and infant's-wholesale
- Sportswear: women's and children's-wholesale
- Suits: women's, children's, and infants'-wholesale
- Underwear: women's, children's, and infants'-wholesale
- Uniforms: women's and children's-wholesale
- Unisex clothing women's and children's-wholesale
- Waterproof outer garments: women's and children's-wholesale
Clothing Wholesaler Distributor Insurance - The Bottom Line
Not all clothing wholesaler distributor insurance polices have the same coverages, exclusions and limits. If you are looking for commercial insurance, or want to see if you have the best fit coverage, speak to an experienced broker to discuss your options.
In many cases they can save you premium dollars and offer you better policy options than you currently have.
Additional Resources For Wholesale And Distribution Insurance
Read informative articles on wholesale distribution insurance. Distributors and wholesalers face specific risks including fire, flood and weather damage that can destroy products in the distribution center - and every part of the supply chain including late supplier shipments to unpaid invoices - can effect the entire operation.
- Air Conditioning And Heating
- Audio And Video Equipment
- Beer & Ale
- Cameras & Musical Instruments
- CDs, DVDs And Videos
- Dairy Products
- Dry Goods
- Electrical Appliances
- Electrical Equipment
- Electrical Supplies
- Electronic Equipment
- Greeting Cards
- Importer & Exporter
- Liquor Wholesaler
- Manufacturers Representative
- Motion Picture
- Plate Glass
- Plumbing Supplies
- Restaurant Equipment
- Roofing Materials
- Seed Merchants
- Theatrical Supplies
- Wholesale Florist
- Wholesaler Distributor
- Specialty Dealers And Distributors
The wholesale distribution industry plays a crucial role in the supply chain process, connecting manufacturers and retailers to customers. It involves the storage, transportation, and distribution of a wide range of products, including raw materials, finished goods, and equipment.
Wholesale and distribution operations have many of the same physical damage and property coverage concerns as warehouse operations. In both, the value of both real property and stocks of merchandise is very high. Loss control and other techniques appropriate to the types of merchandise involved are needed. For these reasons, adequate and appropriate property insurance coverages are important.
As with any business, the wholesale distribution industry is exposed to a variety of risks that can impact its operations and profitability. These risks can range from property damage and theft to liability claims and employee injuries.
Business insurance helps to protect a wholesale distribution company from these potential losses by providing financial protection in the event of unexpected events. It helps to cover the costs of repairs, replacements, and legal fees, as well as lost income and wages.
For example, if a warehouse fire destroys a large portion of a wholesale distributor's inventory, business insurance can help to cover the cost of replacing the lost goods and repairing the damaged property. Similarly, if a customer is injured on the company's premises, liability insurance can help to cover the cost of legal fees and settlement payments.
In addition to protecting the company's assets and financial stability, commercial insurance also helps to protect the company's reputation. If a company is sued or faces a major loss, it can damage its reputation and credibility in the industry. Business insurance helps to mitigate these risks and maintain a positive reputation.
Overall, the wholesale distribution industry needs business commercial insurance to protect against unexpected risks and losses, maintain financial stability, and protect the company's reputation. Without it, a company may face significant financial losses and potential legal liabilities that could impact its operations and profitability.
Minimum recommended small business insurance coverage: Business Personal Property, Business Income and Extra Expense, Accounts Receivable, Computers, Contractors' Equipment, Goods in Transit, Valuable Papers and Records, Employee Dishonesty, General Liability, Employee Benefits, Umbrella, Business Automobile Liability and Physical Damage, Hired and Non-owned Auto & Workers Compensation
Other commercial insurance policies to consider: Building, Earthquake, Equipment Breakdown, Flood, Leasehold Interest, Real Property Legal Liability, Signs, Computer Fraud, Forgery, Money and Securities, Cyberliability, Employment-Related Practices and Stop Gap Liability.