Wholesaler Distributor Insurance Policy Information
Wholesaler Distributor Insurance. The wholesaler distributor business is booming, and if you're part of the trend, then you need to protect your business' future and financial well-being with proper business insurance. Like any other business, your wholesale distribution business should be protected fully from financial risks.
Merchandise wholesalers receive a wide range of items from foreign or domestic manufacturers for distribution to various types of retailers. Stock may include clothing, gifts, glassware, hardware, novelties, paper goods, or plastic items, which tend to be low in value and are easily replaceable. The distribution center may be open 24 hours a day. Generally, the products are delivered to the customer on the distributor's vehicles.
You need to keep workers safe and deliver your goods promptly. If a customer or other third party claims they were injured on your premises, you may find yourself paying thousands of dollars in legal fees, court fees and judgment settlement costs. You manage products and people that's why you need wholesaler distributor insurance protection. A disruption anywhere in your supply chain can impact your ability to make payroll an pay bills.
Wholesaler distributor insurance protects your business from lawsuits with rates as low as $57/mo. Get a fast quote and your certificate of insurance now.
Below are some answers to commonly asked wholesaler & distributor insurance questions:
- What Is Wholesaler Distributor Insurance?
- How Much Does Wholesaler Distributor Insurance Cost?
- Why Do Wholesalers And Distributors Need Insurance?
- What Type Of Insurance Do Wholesalers And Distributors Need?
- What Are Wholesale Distributors Risks & Exposures?
- What Does Wholesaler Distributor Insurance Cover & Pay For?
What Is Wholesaler Distributor Insurance?
Wholesaler Distributor insurance is a type of coverage that is specifically designed to protect the financial interests of businesses that are involved in the distribution of goods to retailers or other businesses.
This insurance is designed to cover a wide range of risks, including damage or loss of goods, liability claims, and other financial losses that may occur as a result of the business activities of a wholesaler distributor.
Some common types of coverage that may be included in a wholesaler distributor insurance policy include property damage, product liability, general liability, and workers' compensation. Additionally, many policies also offer coverage for theft, fire, and other natural disasters.
How Much Does Wholesaler Distributor Insurance Cost?
Wholesale distributor insurance is inexpensive, especially when you consider what it actually covers.
The average price of a standard $1,000,000/$2,000,000 General Liability Insurance policy for small wholesaler distributor businesses ranges from $57 to $139 per month based on location, size, payroll, sales and experience.
Smaller distributors may pay even less, as they can get a general business owner's policy (BOP).
Remember, though, that the point isn't to pay as little as possible. The point is to make sure your business gets the coverage it needs to ward off disaster like fire, flood, lawsuits, vandalism, theft, and other events which could threaten your ability to serve your customers.
For example, you can lower your rates by taking less coverage, but you might regret that decision later if your policy limits don't cover sustained losses.
Wholesaler distributor insurance can be the reason you get to stay in business after an adverse event. And since it typically costs less than your monthly utility bill even at some of the highest policy limits, it's well worth sitting down with your agent to make sure you're getting exactly what you need.
Why Do Wholesalers And Distributors Need Insurance?
Wholesalers and distributors need insurance for a variety of reasons. One of the main reasons is to protect their businesses from potential liability claims. If a product they distribute is defective and causes harm to a consumer, the wholesaler or distributor could be held legally responsible.
Commercial insurance can help cover the cost of any legal fees and settlements that may arise from such a claim.
Additionally, wholesalers and distributors often have a lot of inventory and equipment that needs to be protected. Insurance can provide coverage for damage or loss of these items due to events such as fires, storms, or theft.
Wholesalers and distributors may also have employees working for them, and it is important to have insurance in case any of these employees are injured on the job. Workers' compensation insurance can help cover the cost of medical treatment and lost wages for injured employees.
In summary, wholesalers and distributors need insurance to protect their businesses from potential liability claims, to cover damage or loss of inventory and equipment, and to provide coverage for injured employees. Without insurance, these businesses could face significant financial losses and potentially even go bankrupt.
What Type Of Insurance Do Wholesalers And Distributors Need?
Wholesalers and distributors usually need more than one type of commercial insurance policy to adequately cover all of their needs. There usually isn't just one policy that will get the job done for them.
Wholesalers and distributors do millions of dollars in business each year, and there are nearly a half million wholesalers in the United States. Some of the basic wholesaler distributor insurance coverages that you need to ensure that your business stays healthy and prosperous despite any claims brought against you include:
- Commercial Auto. If you own or lease a vehicle that is used for business purposes, then commercial vehicle insurance is an essential requirement for your business.
- Commercial Property. This coverage is valuable because it covers your physical location, including your warehouse or shipping center.
- Commercial Umbrella. This is an additional amount of coverage beyond your basic liability limits.
- Fidelity Bond. Employee theft is mitigated by this essential coverage.
- General Liability. If your business activities cause property damage or bodily injury, this coverage kicks in and covers the costs of those affected.
- Worker's Compensation. Protect your employees with worker's compensation insurance. In most states, this coverage is required. In others, it should be considered, since it can stave off liability claims against your business when an employee is hurt or becomes ill due to a work-related peril.
While the above-mentioned coverage types are standard for most businesses, including wholesaling and distributing, there are other types of wholesaler distributor insurance coverage that you might consider purchasing, based on your business model and the express needed of your business. Some to think about include:
- Business Interruption. If your business is forced to undergo a work stoppage, this coverage helps keep your business operational. For example, if your warehouse is destroyed by fire, this coverage helps mitigate business expenses while you recoup.
- Data Protection. This coverage protects your business from data breaches involving customers' sensitive data and financial information.
- Flood. Most property insurance coverage does not afford flood protection. This is particularly true if your business is located in a designated flood zone.
A trustworthy business insurance broker can be an invaluable partner in ensuring you get the right type of coverage at the right price. This allows you to get the correct policies at the proper policy limits, keeping your costs low while ensuring your coverage remains high.
What Are Wholesale Distributors Risks & Exposures
Property exposures come from multiple ignition sources, open construction, and the combustibility of stock and their packaging materials. Ignition sources include electrical wiring and equipment. All wiring must be well maintained and up to code for the occupancy. Good housekeeping and fire controls are critical. All stock should be racked and stored with adequate aisle space and limited stockpiling to prevent the spread of a 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. Theft can be a concern if items stocked have a high street value. Alarms, guards, fencing and other security precautions must be in place as appropriate to the location.
Crime exposure is from employee dishonesty. This operation involves a number of transactions and accounts that can be manipulated if duties are not separated. Background checks, including criminal history, should be performed on all employees handling money. Regular audits, both internal and external, are important in order to prevent employee theft of accounts. Good security systems should be in place to discourage employee theft. Physical inventories should be conducted at least annually.
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, cherry pickers, and hand trucks used for moving stored items. While goods may come to the warehouse via contract or common carriers or trains, items are generally delivered to customers on trucks owned by the distributor. Goods can be damaged during transit by collision or overturn, but most can be salvaged and do not have a high breakage potential.
Premises liability exposure is generally limited due to lack of public access to the storage facilities. If customers pick up goods, loading docks must be clearly marked and user-friendly. Customers should be confined to specific areas that are kept clean, dry and free of obstacles. 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 exposure is low if products are all from domestic manufacturers. Products should be marked for easy access in case of recall.
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. Forklift and cherry picker operators must be properly trained. Shelving must be stable to prevent stored goods from falling onto workers. Floor coverings or coatings in the warehouse can pose slip and fall hazards. Housekeeping is critical.
Commercial auto exposure comes from the salespersons' fleet and delivery vehicles. There should be a written policy 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 Wholesaler Distributor Insurance Cover & Pay For?
Wholesalers and distributors can be sued for a variety of reasons, including product liability, breach of contract, and negligence. Here are some examples of why they may be sued and how insurance can protect them:
Product Liability: If a wholesaler or distributor sells a product that is defective or causes harm to a customer, they may be held liable for damages. Product liability insurance can help cover the costs of legal fees, settlements, and judgments in such cases.
For example, if a wholesaler sells a defective toy that injures a child, the parents of the child may sue the wholesaler for damages. If the wholesaler has product liability insurance, the insurance can help pay for the costs of the lawsuit.
Breach of Contract: Wholesalers and distributors may be sued if they fail to fulfill their contractual obligations with a supplier or customer. This can include issues such as late delivery, incorrect product shipments, or failure to pay for goods or services. Business liability insurance can help cover the costs of legal fees and settlements in such cases.
For example, if a distributor fails to pay a supplier for a shipment of goods, the supplier may sue the distributor for breach of contract. If the distributor has business liability insurance, the insurance can help pay for the costs of the lawsuit.
Negligence: Wholesalers and distributors may be sued if they fail to exercise reasonable care in their business practices, resulting in harm to a customer or supplier. This can include issues such as unsafe working conditions, failure to properly package or label products, or failure to adequately train employees. General liability insurance can help cover the costs of legal fees, settlements, and judgments in such cases.
For example, if a wholesaler fails to properly label a product that causes harm to a customer, the customer may sue the wholesaler for negligence. If the wholesaler has general liability insurance, the insurance can help pay for the costs of the lawsuit.
In summary, insurance can provide critical protection for wholesalers and distributors facing lawsuits. By purchasing appropriate insurance policies, these businesses can mitigate the financial risks associated with legal claims and ensure they have the resources to defend themselves in court.
Commercial Insurance And Business Industry Classification
- SIC CODE: 5099 Durable Goods, NEC, 5199 Nondurable Goods, NEC
- NAICS CODE: 423990 Other Miscellaneous Durable Goods Merchant Wholesalers, 424990 Other Miscellaneous Nondurable Goods Merchant Wholesalers
- Suggested Workers Compensation Code(s): 8018 Store - Wholesale - NOC
Description for 5099: Durable Goods, NEC
Division F: Wholesale Trade | Major Group 50: Wholesale Trade-durable Goods | Industry Group 509: Miscellaneous Durable Goods
5099 Durable Goods, Not Elsewhere Classified: Establishments primarily engaged in the wholesale distribution of durable goods, not elsewhere classified, such as musical instruments and forest products, except lumber.
- Ammunition, except sporting
- Cassettes, prerecorded: audio
- Cordwood
- Fire extinguishers
- Firearms, except sporting
- Firewood
- Game machines, coin-operated
- Gas lighting fixtures
- Logs, hewn ties, posts, and poles
- Luggage
- Machine guns
- Monuments and grave markers
- Musical instruments
- Phonograph records
- Portraits
- Pulpwood
- Roundwood
- Signs, except electric
- Tapes, audio prerecorded
- Timber products, rough
- Wood chips
Description for 5199: Nondurable Goods, NEC
Division F: Wholesale Trade | Major Group 51: Wholesale Trade-non-durable Goods | Industry Group 519: Miscellaneous Non-durable Goods
5199 Nondurable Goods, Not Elsewhere Classified: Establishments primarily engaged in the wholesale distribution of non-durable goods, not elsewhere classified, such as art goods, industrial yarns, textile bags, and bagging and burlap.
- Advertising specialties
- Art goods
- Artists' materials
- Bags, textile
- Baskets: reed, rattan, willow, and wood
- Broom, mop, and paint handles
- Burlap
- Candles
- Canvas products
- Cats
- Chamois leather
- Charcoal
- Christmas trees, including artificial
- Clothes hampers
- Cotton yarns
- Curios
- Dogs
- Felt
- Fish, tropical
- Foam rubber
- Furs, dressed
- Gifts and novelties
- Glassware, novelty
- Greases, animal and vegetable
- Hairbrushes
- Ice, manufactured or natural
- Industrial yarn
- Jewelry boxes
- Leather and cut stock
- Leather goods, except footwear, gloves and luggage
- Lighters, cigar and cigarette
- Linseed oil
- Matches
- Novelties, paper
- Oils, except cooking: animal and vegetable
- Oilseed cake and meal
- Pet supplies, except pet food
- Pipes, smokers'
- Plant food
- Plastics foam
- Rayon yarns
- Rennet
- Rubber, crude
- Sawdust
- Sheet music
- Silk yarns
- Smokers' supplies
- Sponges
- Statuary
- Vegetable cake and meal
- Wigs
- Wood carvings
- Woolen and worsted yarns
- Worms
- Yarns
Popular Types Of Wholesalers And Distributors
Following are some of the more common and popular distribution and wholesaling business that need commercial insurance:
Air Conditioning and Heating Wholesalers
Air-conditioning and/or heating wholesalers receive their products from foreign or domestic manufacturers, usually by truck, for distribution to retailers, commercial builders, and other commercial establishments. The wholesaler may sell stock from a warehouse or may simply arrange for items to be shipped directly from the manufacturer to the purchaser. The wholesaler does not modify the equipment in any way or do the installation. The distribution center may be open 24 hours a day. Generally, the products are delivered to the customer on the distributor's vehicles.
Description for 5075: Warm Air Heating and Air-Conditioning Equipment and Supplies | Division F: Wholesale Trade | Major Group 50: Wholesale Trade-durable Goods |Industry Group 507: Hardware, And Plumbing And Heating Equipment
5075 Warm Air Heating and Air-Conditioning Equipment and Supplies: Establishments primarily engaged in the wholesale distribution of warm air heating and air-conditioning equipment and supplies.
- Air pollution control equipment and supplies
- Air-conditioning equipment, except room units
- Automotive air-conditioners
- Compressors, air-conditioning
- Condensing units, air-conditioning
- Dust collection equipment
- Furnaces, heating: electric
- Furnaces, warm air
- Humidifiers and dehumidifiers, except portable
- Ventilating equipment and supplies
- Warm air heating and cooling equipment
Beer and Ale Distributors
Beer and ale wholesalers receive packaged goods from foreign or domestic distilleries, usually by truck, for distribution to package liquor stores, grocery stores, restaurants, concession stands, and other retail establishments. The distribution center may be open 24 hours a day. Generally, the product is delivered to the customer on the distributor's vehicles.
Description for 5181: Beer and Ale | Division F: Wholesale Trade | Major Group 51: Wholesale Trade-non-durable Goods | Industry Group 518: Beer, Wine, And Distilled Alcoholic Beverages
5181 Beer and Ale: Establishments primarily engaged in the wholesale distribution of beer, ale, porter, and other fermented malt beverages.
- Ale
- Beer and other fermented malt liquors Porter
Beverage Distributors (non-alcoholic)
Non-alcoholic beverage wholesalers receive packaged goods from foreign or domestic manufacturers or bottling plants, usually by truck, for distribution to grocery stores, restaurants, concession stands, and other retail establishments. Products may include bottled water, carbonated soft drinks or sparkling water, coffees, juices, sports drinks, or teas. The distribution center may be open 24 hours a day. Generally, the product is delivered to the customer on the distributor's vehicles
Cabinets - Wholesale
Cabinet wholesalers receive items such as kitchen or bathroom cabinets, shelves, and counters as well as adhesives, nails, and sealants from foreign or domestic manufacturers, usually by truck, for distribution to retailers, commercial builders, and other commercial establishments. The wholesaler does not modify the cabinets in any way or do the installation. The distribution center may be open 24 hours a day. Generally, the products are delivered to the customer on the distributor's vehicles.
Electrical Appliances
Electrical appliance wholesalers receive household or commercial appliances from foreign or domestic manufacturers, usually by truck, for distribution to electronic appliance stores, department and discount houses, furniture stores, and other retail establishments. Items can be large appliances such as dishwashers, dryers, refrigerators, stoves, and washers, or smaller appliances used in the bath, kitchen, or workshop. The distribution center may be open 24 hours a day. Generally, the products are delivered to the customer on the distributor's vehicles.
Description for 5064: Electrical Appliances, Television and Radio Sets | Division F: Wholesale Trade | Major Group 50: Wholesale Trade-durable Goods | Industry Group 506: Electrical Goods
5064 Electrical Appliances, Television and Radio Sets: Establishments primarily engaged in the wholesale distribution of radio and television receiving sets, other household electronic sound or video equipment, self-contained air-conditioning room units, and household electrical appliances. Also included are establishments primarily engaged in the wholesale distribution of household nonelectric laundry equipment and refrigerators and freezers.
- Air-conditioning room units, self-contained
- Answering machines, telephone
- Clothes dryers, household: electric and gas
- Dishwashers, household: electric
- Electric appliances, household
- Electric housewares and household fans
- Electric irons
- Electric ranges
- Electric razors
- Electric washing machines
- Freezers, household
- Garbage disposals, electric
- Humidifiers and dehumidifiers, portable
- Ironers, household: electric
- Microwave ovens, household
- Motor vehicle radios
- Percolators, electric
- Phonographs, except coin-operated
- Radios, receiving only, household and automotive
- Refrigerators, household: electric and gas
- Sewing machines, household: electric
- Stereo equipment
- Stoves, cooking or heating, household electric
- Tape players and recorders, household
- Television sets
- Toothbrushes, electric
- Vacuum cleaners, household
- Video disc players
- Waffle irons, electric
- Washing machines, household electric
- Water heaters, electric
Furniture Wholesalers
Furniture wholesalers receive all types of household and office furniture and related furnishings from foreign or domestic manufacturers, usually by truck, for distribution to furniture stores, department and discount stores, and other retailers. Items distributed include bedroom suites, bookcases, cabinets, chairs, decorative items, desks, lamps, mattresses, rugs, sofas, and tables. Some also stock electrical appliances and computers. The distribution center may be open 24 hours a day. Generally, the products are delivered to the customer on the distributor's vehicles.
Description for 5021: Description for 5021 Furniture | Division F: Wholesale Trade | Major Group 50: Wholesale Trade-durable Goods | Industry Group 502: Furniture And Home Furnishings
5021 Furniture: Establishments primarily engaged in the wholesale distribution of furniture, including bedsprings, mattresses, and other household furniture; office furniture; and furniture for public parks and buildings.
- Bar furniture
- Bedsprings
- Cafeteria furniture
- Chairs household, office, and public building
- Church pews
- Desks, including school
- Furniture, juvenile
- Furniture, unfinished
- Furniture household, office, restaurant, and public building
- Lawn furniture
- Mattresses
- School desks
- Theater seats
- Waterbeds
Wholesaler Distributor Insurance - The Bottom Line
As a wholesale business owner, you know the risks involved in the business better than anyone. Analyze those risks prior to deciding on your coverage level, based on your business' physical location and property, the employees you have working for you, the inventory you need to protect, the equipment your business owns, and other factors.
Compare quotes among several companies to find the right level of affordability and protection for your unique business. In some cases, your business may need blanket coverage, such as if you have a vehicle fleet to protect. You may need to buy surplus coverage or specialty coverage for particular types of products that you sell.
A seasoned agent can help you achieve peace of mind that your business is fully protected, your assets are insured to the fullest, and any claims arising against your business won't damage your business financially, so you can continue to grow and prosper in the wholesale distributor industry.
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
- Beverage
- Cabinets
- Cameras & Musical Instruments
- Candy
- CDs, DVDs And Videos
- Clothing
- Coffee
- Confectioners
- Dairy Products
- Drugs
- Dry Goods
- Electrical Appliances
- Electrical Equipment
- Electrical Supplies
- Electronic Equipment
- Envelopes
- Extracts
- Food
- Fruit
- Fur
- Furniture
- Gifts
- Glassware
- Greeting Cards
- Grocers
- Hardware
- Importer & Exporter
- Jewelry
- Lamps
- Liquor Wholesaler
- Lumber
- Manufacturers Representative
- Meat
- Motion Picture
- Novelties
- Paint
- Petroleum
- Plate Glass
- Plumbing Supplies
- Restaurant Equipment
- Roofing Materials
- Rugs
- Seed Merchants
- Shoes
- Stationers
- Theatrical Supplies
- Tires
- Tools
- Toys
- Wallpaper
- 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.
