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, paper or plastic items it doesn't matter. We are ready to help protect your business interests.
Types of exposure that wholesale distributors need to protection from:
Property exposures: If you are storing product, then you have concerns of inventory loss and damage from fire, smoke or water. Make sure all electrical wiring and equipment is 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, sprinkler systems and have fire extinguishers on hand. Keep a "no smoking" warehouse, 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 exposure: 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 clean from 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 product from foreign manufacturers? Talk to your agents about this, especially if you are white labeling these. Furthermore, make sure you buy product 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 sales people use. Make sure all drivers of company vehicles have DMV back ground checks on the driving habits. Provide employee safety training. Institute random drug and alcohol testing for all drivers. Do you have forklifts for loading and loading trucks and stocking warehouse shelving? If so, make sure all employees are properly trained and certified. Keep all vehicles are 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 the employees to properly do their jobs. Make sure all forklift drivers get safety training. Are all warehouse shelving secured to the cement floor? Take the time to keep warehouse floors free of spills and product 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