If you own a wholesale distribution company or a warehouse and you’re operating without insurance, you could be putting your business at risk. A comprehensive business insurance policy can help you cover the costs associated with hazards like workplace injuries, property damage, lawsuits and much more. But what types of coverage do you need?
Be sure to read our crash course on wholesale insurance before you sign up for a policy. We’ll cover a few of the most common types of insurance that wholesale distributors purchase, what factors influence your premiums and how insurance works. We’ll also introduce you to a few of our favorite companies offering wholesale insurance options.
Best Wholesale Insurance
As a wholesale distributor, you have access to dozens of companies across the country providing insurance options. Not sure where to begin your search? Consider a few of our top choices below.
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Types of Wholesale Insurance
There are many types of insurance that you might want to invest in as a wholesale business operator. Below are a few of the most common coverages wholesale distributors purchase to protect their products and employees.
Commercial Property Insurance
Commercial property insurance is the most important insurance coverage for wholesale distributors and warehouse owners. Commercial property insurance is a type of protection that compensates you if your own property is damaged as a result of a covered peril. Some common perils that commercial property insurance will protect you against include:
- Vandalism and burglaries
- Lightning strikes
Commercial property insurance is similar to homeowners insurance because each policy includes a list of covered perils you’ll have coverage under. For example, if a burglar decides to break into your warehouse and steal some of your products, your insurance will help you cover the costs associated with repairing the point of entry and replacing the merchandise that was stolen.
General Liability Insurance
General liability insurance is a type of coverage that provides you with a range of protections against common lawsuits. Though the specific coverages included on each policy will vary by company, you can usually expect your general liability insurance to offer the following protections:
- 3rd-party bodily injury: Your 3rd-party liability insurance helps you pay for legal expenses and court-awarded judgements if a client sues you for injuries after being hurt on your property.
- 3rd-party property damage: Your 3rd-party property damage coverage helps cover legal expenses and court-awarded judgements if you or an employee damages or destroys a client’s property. Say your employee drops a client’s laptop and the client sues for the cost of a replacement, your 3rd-party property damage coverage would come into play.
- Advertising injuries: When you advertise your business, you can accidentally slander a competing company or copy a slogan that’s already in use. Advertising injury protections compensate you for court-awarded judgements and legal expenses if another wholesale company decides to sue.
Your general liability coverages will only compensate you for lawsuits brought against your business. It won’t help you bring legal action against a client or competitor.
Business Owners Policy (BOP)
If you’re interested in purchasing both a general liability insurance policy and a commercial property insurance policy, consider investing in a business owners policy (BOP). A BOP is an all-inclusive policy that combines your general liability and your commercial property coverages together into 1 single policy. Most business owners prefer a BOP over purchasing individual policies because this option is more affordable and allows you to pay a single premium each month.
Product Liability Insurance
Even the most careful business owner can make a mistake when producing their product. For example, if you manufacture clothing, you could accidentally create a child’s t-shirt with a neckline that’s too small, creating a choking hazard. If you manufacture the products you sell, you should invest in a great product liability insurance policy.
Product liability insurance protects you from the fallout that occurs if a client or customer is injured by your product and sues you for damages. This protection can help you cover the costs of legal expenses, product recalls and any court-awarded judgements after a client sues you for a defective product.
Workers’ Compensation Insurance
If you have at least 1 employee who you hire on a full-time or part-time basis, you might be required to purchase a workers’ compensation policy. Workers’ comp is a type of protection that compensates your employees if they’re injured in the course of their work-related duties. If an employee loses his or her life while on the job, your workers’ compensation policy may also offer a payout to family members responsible for arranging funeral and memorial services.
Depending on where you live, workers’ compensation might be a required coverage as soon as you hire your first employee. Coverage levels and requirements vary by state, so be sure to read up on your location’s unique laws before you purchase a policy. This will ensure that you’ve got the coverage you need to continue operating your business in a legal manner.
How Wholesale Insurance Works
There is no single insurance policy called “wholesale insurance” intended for distribution companies and warehouse owners. Instead, the term refers to common sets of coverages that wholesale companies purchase to protect themselves against a multitude of hazards.
Most wholesale distributors purchase commercial property coverage as their base insurance protection. This insurance compensates you if your inventory or business space is damaged due to perils like fire and theft, so it’s an absolutely essential type of coverage for wholesale companies.
We also recommend that you purchase a product liability insurance policy if you manufacture the products you sell. If you have clients visit your property frequently, you might also want to add a general liability insurance policy to your list of protections. You can often combine both of these policies together with a BOP to save money and enjoy a more manageable premium.
Cost of Wholesale Insurance
The specific price that you’ll pay for your wholesale insurance will vary depending on the nature of your business, your location and much more. Some of the factors that may influence what you can expect to pay for coverage include:
- Your location: Thefts, vandalism and natural disasters are more likely to occur in some cities and states than others. If you live in an area where one of the covered perils included in your policy is more common, you’ll pay more for your insurance coverage.
- Types of products you distribute: If you sell or store a product that’s more likely to cause injuries or be damaged over the course of distribution, you’re more likely to need to file an insurance claim. This increases the price you’ll pay for coverage.
- Value of your inventory: If you store high-value products or you have a wide range of items stored in your warehouse, your insurance company might need to offer you a higher payout if you need to file a claim. Expect the amount you pay for insurance to rise as you add more value to your warehouse or begin to carry more expensive products.
- Number of employees you have: If you have at least 1 employee, you might need to purchase workers’ compensation insurance. The more employees you have on payroll, the more potential for injury your business operations carry — and the more you’ll pay for your insurance.
The only way to know for sure what you’ll pay for your insurance is to get a quote from a few competing wholesale insurance providers. Get started right here on Benzinga by entering your ZIP code above to start exploring insurance options.
Learn More About Your Insurance Options
With so many insurance companies offering policies and coverages, how can you be sure that you’re working with the best company for your needs? Begin by collecting quotes from a few competing insurance providers. Because each insurance company uses its own formula to calculate premiums, prices for the same coverage might vary widely among insurance providers. Exploring all your options gives you the peace of mind that comes with knowing you’ve got the right coverage when you do puchase a policy.