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:
- How Much Does Wholesaler Distributor Insurance Cost?
- What Type Of Insurance Do Wholesalers And Distributors Need?
- What Other Types Of Business Insurance Should Wholesalers And Distributors Consider?
How Much Does Wholesaler Distributor Insurance Cost?
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.
What Type Of Insurance Do Wholesalers And Distributors Need?
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.
What Other Types Of Business Insurance Should Wholesalers And Distributors Consider?
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.
Working with a knowledgeable agent who understands the wholesaling distributing business is important to finding the right level of coverage with limits that allow for all the potential perils you face as a business owner.
For example, your agent can help you understand the way that premiums are calculated based on inventory. If your inventory fluctuates throughout the year, as is the case with most businesses, your agent can help you learn the nuances of reporting inventory levels throughout the year, so that you pay a wholesaler distributor insurance premium based on the appropriate level of goods that you need to insure.
It is also important that your wholesaling business protect the goods that you have in transit to other locations. This is a rather complicated scenario, since you may have goods being shipped by air or by truck, all with different contracts between you and the shipper and the shipper and the end customer.
A qualified broker can ensure that you get the right type of wholesaler distributor insurance coverage for these special situations that are unique to the wholesaling and distributing insurance niches.
Wholesale Distributor's 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.
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 ISO General Liability Code(s): 12361, 12362
- Suggested Workers Compensation Code(s): 8018
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
- Fire extinguishers
- Firearms, except sporting
- Game machines, coin-operated
- Gas lighting fixtures
- Logs, hewn ties, posts, and poles
- Machine guns
- Monuments and grave markers
- Musical instruments
- Phonograph records
- 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
- Canvas products
- Chamois leather
- Christmas trees, including artificial
- Clothes hampers
- Cotton yarns
- Fish, tropical
- Foam rubber
- Furs, dressed
- Gifts and novelties
- Glassware, novelty
- Greases, animal and vegetable
- 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
- 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
- Rubber, crude
- Sheet music
- Silk yarns
- Smokers' supplies
- Vegetable cake and meal
- Wood carvings
- Woolen and worsted 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.
- 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 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 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
- 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
- School desks
- Theater seats
Wholesaler Distributior 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.
Types Of Small Business Insurance - Requirements & Regulations
Perhaps you have the next great idea for a product or service that you know will appeal to your local area. If you've got a business, you've got risks. Unexpected events and lawsuits can wipe out a business quickly, wasting all the time and money you've invested.
Operating a business is challenging enough without having to worry about suffering a significant financial loss due to unforeseen and unplanned circumstances. Small business insurance can protect your company from some of the more common losses experienced by business owners, such as property damage, business interruption, theft, liability, and employee injury.
Purchasing the appropriate commercial insurance coverage can make the difference between going out of business after a loss or recovering with minimal business interruption and financial impairment to your company's operations.
Insurance is so important to proper business function that both federal governments and state governments require companies to carry certain types. Thus, being properly insured also helps you protect your company by protecting it from government fines and penalties.
Small Business Insurance Information
In the business world, there are many risks faced by company's every day. The best way that business owners can protect themselves from these perils is by carrying the right insurance coverage.
The The National Association of Insurance Commissioners (NAIC) is the U.S. standard-setting and regulatory support organization. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer review, and coordinate their regulatory oversight.
Commercial insurance is particularly important for small business owners, as they stand to lose a lot more. Should a situation arise - a lawsuit, property damage, theft, etc. - small business owners could end up facing serious financial turmoil.
According to the SBA, having the right insurance plan in place can help you avoid major pitfalls. Your business insurance should offer coverage for all of your assets. It should also include liability and casual coverage.
Types Of Small Business Insurance
Choosing the right type of coverage is absolutely vital. You've got plenty of options. Some you'll need. Some you won't. You should know what's available. Once you look over your options you'll need to conduct a thorough risk assessment. As you evaluate each type of insurance, ask yourself:
- What type of business am I running?
- What are common risks associated with this industry?
- Does this type of insurance cover a situation that could feasibly arise during the normal course of doing business?
- Does my state require me to carry this type of insurance?
- Does my lender or do any of my investors require me to carry this type of policy?
A licensed insurance agent or broker in your state can help you determine what kinds of coverages are prudent for your business types. If you find one licensed to sell multiple policies from multiple companies (independent agents) that person can often help you get the best insurance rates, too. Following is some information on some of the most common small business insurance policies:
|Business Insurance Policy Type||What Is Covered?|
|General Liability Insurance||What is covered under commercial general liability insurance? It steps in to pay claims when you lose a lawsuit with an injured customer, employee, or vendor. The injury could be physical, or it could be a financial loss based on advertising practices.|
|Workers Compensation Insurance||What is covered under workers compensation insurance? This type of insurance protects a business and its owner(s) from claims by employees who suffer a work-related injury, illness or disease. Workers comp typically provides the injured employee with benefits to cover medical expenses, a portion of his/her lost wages, rehabilitation costs if applicable, and permanent partial or permanent total disability.|
|Product Liability Insurance||What is covered under product liability insurance? I pays an injured party's settlement or lawsuit claim arising from a defective product. These are usually caused by design defects, manufacturing defects, or a failure to provide adequate warning or instructions as to how to safely use the product.|
|Commercial Property Insurance||What is covered under business property insurance? General liability policies don't cover damages to your business property. That's what commercial property insurance is for. It protects all of the physical parts of your business: your building, your inventory, and your equipment, giving you the funds you need to replace them in the event of a disaster. If you work from home, you might consider a Home Based Business Insurance policy instead.|
|Business Owners Policy (BOP)||What is covered under a business owners policy (BOP)? This is a policy designed for small, low-risk businesses. It simplifies the basic insurance purchase process by combining general liability policies with business income and commercial property insurance.|
|Commercial Auto Insurance||What is covered under business auto insurance? This type of insurance covers automobiles being used for business purposes. This could include a fleet of business-only vehicles or a single company car. In some cases it might cover your car or your employee's car while they're being used for business. These policies have much higher limits, ensuring you can cover your costs if one of these vehicles gets into an accident.|
|Commercial Umbrella Policies||What is covered under commercial umbrella insurance? This type of policy is a sort of "gap" insurance. It covers your liability in the event that a court verdict or settlement exceeds your general liability policy limits.|
|Liquor Liability Insurance||What is covered under liquor liability insurance? It covers bodily injury or property damage caused by an intoxicated person who was served liquor by the policy holder.|
|Professional Liability (Errors & Omissions)||What is covered under professional liability insurance? This type of business insurance is also known as malpractice oe E&O. It covers the damages that can arise from major mistakes, especially in high-stakes professions where mistakes can be devastating.|
|Surety Bond||What is covered under surety bonds? Bonding is a contract where one party, the SURETY (who assures the obligee that the principal can perform the task), guarantees the performance of certain obligations of a second party, the PRINCIPAL (the contractor or business who will perform the contractual obligation), to a third party, the OBLIGEE (the project owner who is the recipient of an obligation).|
Who Needs General Liability Insurance? - Virtually every business. A single lawsuit or settlement could bankrupt your business five times over. You might also need this policy to win business. Many companies and government agencies won't do business with your company until you can produce proof that you've obtained one of these policies.
Business Insurance Required by Law
If you have any employees most states will require you to carry worker's compensation and unemployment insurance. Some states require you to insure yourself even if you are the only employee working in the business.
Your insurance agent can help you check applicable state laws so you can bring your business into compliance.
Other Types Of Small Business Insurance
There are dozens of other, more specialized forms of small business insurance capable of covering specific problems and risks. These forms of insurance include:
- Business Interruption Insurance
- Commercial Flood Insurance
- Contractor's Insurance
- Cyber Liability
- Data Breach
- Directors and Officers
- Employment Practices Liability
- Environmental or Pollution Liability
- Management Liability
- Sexual Misconduct Liability
Whether you need any or all of these policies will depend on the results of your risk assessment. For example, you probably don't need an environmental or pollution policy if you're running an IT company out of a leased office, but you would need data breach and cyber liability policies to fully protect your business.
Additional Resources For Manufacturing & Wholesaler Insurance
Read informative articles on small business manufacturing and wholesale insurance. Manufacturing and wholesale companies face many risks due to the nature of their business operations.
- Canned Fruit & Vegetable Manufacturers
- CBD Oil And Hemp
- Machine Shop
- Product Liability
- Wholesaler Distributor
For manufacturers and wholesalers, having the proper coverage is very important. You will need Products/Completed Operations Liability Coverage to protect you against injuries or property damage cause my the products you make or sell.
Manufacturing is an extremely broad category that includes countless potential hazards and exposures in virtually all coverage areas. Because of this, every individual manufacturer is unique and a specific risk survey of every operation is advisable.
The basic insurance needs for every class of business or operation includes property coverage for buildings, machinery and equipment, as well as for raw stock and finished products. Liability insurance for premises exposures is important but products liability insurance presents greater concerns so these exposures and coverage needs must be evaluated carefully.
In addition, protection for injuries to workers, environmental coverages and automobile insurance are priority items.
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.
The commercial auto exposure can also be significant, based on the extent of merchandise delivery. In addition, transportation or motor truck cargo insurance on the merchandise must also be arranged.
Employee theft is always an issue and can be a significant exposure, depending on the type of property involved. Finally, the types of merchandise and material handled makes workers compensation insurance another very important coverage.
What does the insured does that could result in a covered loss? The insuring agreement only requires that the insured be legally obligated to pay damages for injury to others or damage to their property included within the products-completed operations hazard covered by the insurance.
Because of this, every product manufactured and completed operation exposure for each named insured must be determined, described and evaluated to be certain that each represents acceptable exposures, or are acceptable classes of business to the insurance company providing coverage.
Once the extent of all business activities and operations is determined, the process of identifying hazards begins. The first step in the process is completely listing and describing all current products being manufactured and projects being worked on.
The next step is obtaining the same information for discontinued products and completed projects for the past five to 10 years, depending on the products or projects involved. This should include an explanation of why the products were discontinued. If some completed projects were of a different type than those currently being worked on, an explanation is in order, including whether the insured may resume them in the future.
Minimum recommended small business insurance coverage: Building, Business Personal Property, Business Income with Extra Expense, Equipment Breakdown, Employee Dishonesty, Accounts Receivable, Bailees Customers, Computers, Goods in Transit, Valuable Papers and Records, General Liability, Employee Benefits Liability, Environmental Impairment Liability, Umbrella Liability, Hired and Non-owned Auto Liability & Workers Compensation.
Other commercial insurance policies to consider: Earthquake, Flood, Cyber Liability, Employment-related Practices Liability, Business Auto Liability and Physical Damage and Stop Gap Liability.