Recently, wholesale distributors have faced the following lawsuits:
- Selling counterfeit products knowingly or unknowingly.
- Selling expired food and beer.
- Disability lawsuits.
- Price fixing.
What would you do if you were hit with a liability suit for more than your current insurance covered?
We understand the liabilities associated with wholesaling, including shipping and receiving domestic and foreign manufacturers' products. Whether you are wholesaling clothing, glassware, hardware, electronics, beverages, or paper and plastic items, we're are ready to help protect your business interests.
Types of exposure that wholesale distributors need protection from:
Property exposures: If you are storing products, then you have the risk of inventory loss and damage from fire, smoke, or water. Make sure all electrical wiring and equipment are up to code to prevent fires. Many products are made of plastic, which could cause toxic fumes when burned. Install a monitored fire alarm system and a sprinkler system, and have fire extinguishers on hand. Make sure your warehouse is a non-smoking facility, install a monitored security system, and hire security guards to protect your warehousing facilities.
Crime exposure: Do background checks on all new employees. Make sure you have a system of checks and balances so regular audits on the books and inventory are performed. Install a security system with CCTV cameras to discourage employee theft.
Inland marine exposures: This includes accounts receivable if you offer credit to your resellers. You need a computer policy to protect your inventory tracking. Also, you will need a goods-in-transit policy if you are shipping and delivering product to your resellers' warehouses. Products can be damaged during transit and unloading.
Premises liability exposure: Do you have clients, customers, and vendors coming in and out of your warehouses? Keep floors clear of spills, water, and debris. Keep all exits and entries free of ice, snow, and debris. Make sure you have operational emergency and exit lighting. Enclose your yard with fencing and no trespassing signs.
Products liability exposure: Are you importing products from foreign manufacturers? Talk to your agents about this, especially if you are white labeling the products. Furthermore, make sure you buy the products from authorized manufacturers and manufacturer representatives to avoid counterfeit liability issues. Make sure all products are marked for easy access in case the product is recalled.
Automobile exposure: Your biggest liabilities come from delivery vehicles. Do you own tractor trailers you use or lease for your business? Make sure all drivers have the proper CDL licensing. Another liability comes from the vehicles your salespeople use. Make sure to do DMV background checks on all drivers of company vehicles. Provide employee safety training. Institute random drug and alcohol testing for all drivers. Do you have forklifts for loading and unloading trucks and stocking warehouse shelving? If so, make sure all employees are properly trained and certified. Keep all vehicles properly maintained and be sure to keep copies of all maintenance records.
Workers' compensation exposure: Back injuries, hernias, sprains, and strains come from improper lifting. Take the time to teach proper lifting techniques. Provide the safety equipment necessary for employees to properly do their jobs. Make sure all forklift drivers get safety training. Are all warehouse shelves secured to the cement floor? Take the time to keep warehouse floors free of spills and products that could cause slips, trips, and falls.
Here is the minimum recommended distributor insurance coverage:
- Business Personal Property
- Business Income and Extra Expense
- Employee Dishonesty
- Accounts Receivable
- Valuable Papers and Records
- General Liability
- Employee Benefits Liability
- Professional Liability
- Errors and omissions
- Commercial Umbrella Liability
- Hired and Nonownership Auto Liability
- Business Automobile Liability and Physical Damage
- Workers' Compensation
- Cyber insurance
- Contractors' Equipment
- Goods in Transit
Other wholesale distributors insurance coverage to consider:
- Equipment Breakdown
- Leasehold Interest
- Real Property Legal Liability
- Computer Fraud
- Money and Securities
- Special Floater
- Stop Gap Liability
- Employment Practices Liability