What Insurance Coverage Do Distributors & Wholesalers Need?


Jun 26, 2020

Find out what insurance coverages your distributing & wholesaling business needs.

Distributors and Wholesalers are the businesses that operate the network between a company and its suppliers, which produce and distribute a specific product to the final buyer. These businesses make sure that goods get where they need to go. If an accident or mistake happens along the way, the consequences can be severe and affect business operations. While there may be a slight distinction in their business operations because distributors work more closely with manufacturers and wholesalers work more closely with the retailers, the insurance requirements are almost identical.

Who Needs These Insurance Coverages in the Distributing & Wholesaling Industry?

Any companies importing products, buying in bulk for resale, shipping to retail locations or operating along any other aspect of a products supply chain would need Distributors and Wholesalers Insurance.

What Insurance Coverages Do Distributors & Wholesalers Usually Need?

General Liability

General liability is a type of coverage that covers bodily injury, personal and advertising injury, property damage and so on. It covers defense and damage costs, among other things.

Fleet & Cargo Insurance

Fleet Insurance can cover the vehicles used to transport products such as long haul trucks, vans and so on. Cargo Insurance can cover the products if they get damaged or stolen while being transported on the road. If you're a distributor that imports products from overseas, Cargo Insurance can cover those products while they are being transported by sea or by air.

Product Liability

Product Liability coverage protects your business in the event you are legally obligated to pay if one of the products you distribute causes damage to someone or something.

Commercial Property Insurance

This type of insurance works exactly like your property insurance; it covers your business location against fire, theft, flooding and more.

Commercial Automobile Insurance

Commercial Automobile Insurance coverage is essential if you have salespeople out on the road or if you are making small deliveries.

D&O Insurance

D&O or Management liability proved coverage to the management of the company against lawsuits and claims brought on by stakeholders affiliated with the organization like customers or suppliers.

Business Interruption Insurance

If your business suffers a covered loss, like a fire, Business Interruption coverage will pay for your lost income while your business is shut down. This includes: loss of profits, fixed costs and payroll.

Cyber Insurance

Distributors and Wholesalers rely on their computers and software for all aspects of their operations. Cyber coverage protects your company from cyber hacks or data breaches. If your business stores customer info or takes payment by credit cards, you may need this coverage. If you are an E-commerce business, this coverage is critical.

Here's an Example of When Insurance Can Help Protect Your Distributing & Wholesaling Business:

Let us imagine you are a distributor selling clothing irons originally made in China. One of the irons distributed by your business burns the hand of a Canadian customer due to a product defect.

Typically, each company along the supply chain network would attempt to pass the blame onto the seller. This chain of events would unravel like a row of dominoes: The customer blames the retailer, who blames the distributor, followed by the distributor accusing the original manufacturer.

In many cases, it is the manufacturer’s duty to test the product to be sure there are no defects. However, liability is not so easily passed to a manufacturer on the other side of the world. The Canadian customer who had their hand burned is not going to travel overseas to China to sue the manufacturer. With different laws, languages and other factors, it would be extremely hard to sue a company in China in this scenario. Because of this, the blame often moves to the next company down the supply chain - you, the distributor.

Having Product Liability Insurance can help protect you as a Distributor or Wholesaler, and can cover your legal fees and financial losses.

Other Frequently Asked Questions:

How much does insurance cost for Distributors & Wholesalers?

As with all insurance products, there is not one price for how much it will cost. An assortment of factors goes into determining the cost of Distributors and Wholesalers insurance.

Some factors include:

  • Amount of product or stock you are keeping on hand in your warehouse(s),

  • Annual revenue,

  • Reconstruction cost of your building,

  • Size of the business,

  • Claims history,

  • Where you buy your product,

  • What you are selling,

  • And who you are selling to.

For example, an insurance policy for a larger business with multiple warehouses selling children's toys will have a very different cost than a smaller business with one warehouse selling office furniture.

Every business, product and situation is different - especially for varying Distributors and Wholesalers. That's why, it's important to speak to a broker to help examine your business and determine your specific insurance needs as a Distributor or Wholesaler. At Foxquilt, we can help provide you smarter business insurance customized to fit your needs. By joining our Foxquilt community of Distributors and Wholesalers, you can receive better buying power and even unlock group savings on your insurance premiums. Get started on a quote for insurance built for your business.

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