Warehouse Insurance for Distributors: The Policies You Need

As of 2023, there are over 21,000 warehouse establishments in the U.S., up from 19,000 in 2020, most likely attributed to the rise in e-commerce since the pandemic. U.S. wholesale revenue in February 2024 stood at $673.7 billion, up from $669.3 billion in February 2023, an increase of 0.6%. Even with this upward growth trend in revenue, distributors and wholesalers operate with very thin margins, making it essential to protect your assets with the proper insurance coverage.

Central understands the unique business challenges of small-to-midsize wholesale distribution operators that protect and store their own goods in a warehouse facility. We have the expertise you need to find the insurance coverage customized to your business.

Warehouse insurance isn’t just one blanket policy—it’s a combination of coverages and policies that collectively protect a distributor from business losses. In this article, Central’s Director of Manufacturing Underwriting, Erika Melander, offers expert tips on managing and mitigating risk in your operations.

Commercial Property Insurance Options for Distributors

Whether you’re a food distributor, importer, or auto parts supplier, operating a warehouse comes with common risks and liabilities such as:

Property loss

Business interruption/supply chain

Product liability

Contract liability

Employee safety

Auto accidents

Loading/unloading of goods

So with these in mind, the first type of insurance coverage all distributors need is Commercial Property insurance, which covers the physical building and contents, including any equipment used to store your goods.

Melander recommends including Business Interruption insurance as an additional safeguard for your warehousing operation. It protects you against loss of income if you have to close temporarily due to a covered property loss. It goes a step further than property insurance as it covers the profits associated with loss of business, and not just the repair costs of the structure.

Since distributors house a lot of stock, another important coverage option is Business Property and/or Stock, as they both protect all the contents stored within your business property. You should work with your experienced independent Central agent to determine which option is more cost-effective for your operation.

“The most challenging aspect of Commercial Property insurance is the roof of your warehouse,” says Melander. “These are really large buildings with huge roofs, and there are complications of protecting them from an insurance standpoint. Many insurance carriers in the industry have taken different actions in weather-prone regions of the country, with some increasing deductible limits or using a valuation method for claims now. At Central, we use tools to evaluate roofs and conditions and can customize them to your operation. We want to provide the best coverage to our insureds, but they also need to feel comfortable paying their deductible.”

Learn more:The Impact of Inflation on Commercial Property Insurance

General Liability Insurance is Fundamental

General Liability insurance ensures the financial stability of your wholesale business by providing coverage against third-party bodily injuries, property damage, and personal or advertising injury claims. It will help protect your business from legal expenses, medical costs, and damages from accidents on your premises or during business operations. It will also defend you if a customer challenges the product, service, or contract. For more than 140 years, Central Insurance has been satisfying our clients’ needs for the best fundamental insurance coverage, like General Liability, at a reasonable cost.

“Insurance is the mechanism to transfer risk,” Melander explains. “General Liability insurance is that fundamental coverage distributors need to protect against common risks and liabilities.”

One final aspect of your General Liability insurance pertains to the manufacturers or suppliers that are a part of your supply chain. Melander recommends that distributors be covered as an additional insured with third parties like these so the appropriate entities are held responsible for potential risks. Your local Central agent can help you navigate through this process.

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Commercial Auto Insurance for Distributors

Central offers Commercial Auto insurance for vehicles owned or leased by your business, such as automobiles, trucks, and vans. This includes property insurance, which protects against damage to your vehicle, and liability coverage for bodily injury to others and damage to their property.

For distributors in particular, Property in Transit insurance can be an important coverage consideration as it fills a gap between property and auto coverage when the distributor is not transporting their own goods to and from your warehouse.

Several factors determine the cost of your Commercial Auto insurance coverage with Central, including the business use, the new cost of the vehicle, and the liability limit.

Workers’ Compensation Coverage Depends on the State

Warehouses can be dangerous places to work. Potential hazards in this industry include:

Slips, trips, and falls

Forklift accidents

Physical effects of manual labor and repetitive tasks

Workers’ Compensation insurance is critical for distributors as a way to provide financial protection for work-related injuries or illnesses. This insurance covers medical expenses, rehabilitation costs, and lost wages for employees who suffer injuries or illnesses on the job. It’s equally important for fostering a culture of responsibility and care within the workplace while providing financial support when unforeseen accidents occur.

“Workers’ Compensation coverage requirements vary by the state your warehouse is located in, so it’s best to check with your local independent Central agent to ensure appropriate coverage,” Melander states.

Work with a People-First Organization Like Central

Melander adds that Central is the perfect insurance provider partner for wholesalers and distributors because of its commitment to our insureds. “What sets us apart in the space is trust. We’re a people-first organization with high morals and ethics. We’re insuring family, friends, and members of our community, and we want to be part of the solution when something goes wrong in a business’s operations.”

Excellence is Our Policy

These four words encompass the most fundamental of our core values as a company, honoring the trust you place in us each day. That’s why Central’s tailored solutions in Commercial Warehouse insurance will ensure your distribution business thrives. Contact your local independent Central agent for more details about Warehouse insurance or for an insurance quote.