Wholesalers & Distributors Business Insurance

The wholesale distribution industry is growing quickly. The total revenue for US merchant wholesalers grew to $11.382 billion in 2022, up 17.4% from the year before. Wholesalers are an integral part of the U.S. economy, providing a substantial percentage of all goods sold by retailers. Wholesalers aggregate goods from sources all over the world and make them available to retailers by a number of means.

Whatever the method, few retailers could survive without having a source of products through the wholesale market. If you're entering this business or wondering if your current insurance coverage protects you from the financial risks you face, it might be time to learn a bit more about insurance coverage for wholesalers.

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Statistics on U.S. Wholesalers

The Department of Commerce provides the following information on wholesale activity:

U.S. wholesalers did almost $9 trillion of business in 2022
This figure was more than one-third of the entire U.S. gross domestic product for that year
In 2022, there were around 410,000 wholesale businesses in the U.S.

Common Insurance Exposures

There are a number of insurance products commonly needed by almost every business:

Property insurance: Covers the contents of your place of business and the property.
General liability: Covers the costs associated with bodily injury or property damage to other parties arising from your business activities.
Commercial vehicle: Covers your risks from the use of owned or leased vehicles.
Workers compensation: Covers your liability for employees who experience job-related illness or injury and covers their medical expenses and lost income.
Fidelity coverage: Protects your business against employee theft.
Umbrella liability: Provides excess liability coverage that increases the limits on all your primary insurance.

These products represent the core needs of most businesses, large or small. There are other areas of insurance which may be optional as well, including:

Life and health benefits for employees
Aircraft or watercraft insurance, as necessary
Data protection coverage
Business interruption insurance, in case your business is forced to shut down due to a fire or other loss
Flood insurance if your business is at risk
Professional liability insurance, also called errors and omissions, to cover exposures not included in your general liability policy
Directors and officers liability coverage, particularly if you run a public company

Your agent will recommend some combination of these types of coverage, which will form the foundation of your insurance protection.

Regardless of the coverage needed, evaluating quotes from various insurance companies and designing the right wholesale insurance plan requires knowledge and skill.

Wholesale Insurance for Fluctuating Inventory

Wholesalers, manufacturers, and warehousing companies share certain business concerns. The most important of these is the protection of inventory and goods in transit.

Inventory on-premises can fluctuate dramatically, particularly in a business with products with seasonal demand. How do you ensure that you are covered for the peak periods without having to pay an insurance premium based on the highest inventory level year-round?

The best solution to this issue is a monthly reporting inventory form. You can use this form to monitor inventory levels throughout the year.

Instead of paying a premium based on the highest inventory level, you report the inventory on hand and pay a premium based on your actual exposure to risk.

Wholesale Insurance for Goods in Transit

Getting the right coverage for goods in transit can become very complicated. Here are two examples:

Goods being shipped by vessel or air can have title transfer when they are loaded aboard the vessel or aircraft or when they are unloaded, depending on the contract between the shipper and the recipient. Without a contract, international law will determine the title.
If a ship is forced to jettison cargo, there is a formula whereby all interests in the situation, i.e., the owner of the vessel and each owner of goods in transit, share in the loss of the value of the lost goods.

Even domestic shipments present challenges and risks for your business. If you have a wholesale business, it is critical to work with a qualified agent to ensure that you address these risks with the appropriate coverage.

Additional Tips for Buying Wholesale Insurance

When you are seeking wholesale insurance, be sure to consider the various risks you face as a business owner, as well as those for your property, employees, inventory, equipment, and other investments.

By doing so and working with an independent agent specializing in commercial insurance, you can ensure that you do not have any insurance gaps that could compromise your financial well-being.

Here are some additional considerations for wholesalers:

You may need to work with multiple insurance companies: If you do have extensive transit exposures, you may find that it is best to split your program. The company that can handle your routine coverages may not be the right carrier for water or air shipping shipments, especially internationally. Likewise, if you own a corporate watercraft or aircraft, you may find it best to use a specialty carrier for these coverages.
You may need blanket coverage: If you have a large delivery fleet, ask your agent about blanket coverage. This will automatically cover all vehicles owned or leased by your company without the necessity of reporting every new vehicle purchase or sale. Such coverage is usually rated based on sales or payroll.
You may need "surplus" insurance: If you have any unusual insurance risks — for example, if you deal in fireworks or other hazardous materials, or you need to insure international shipments — you may find that you need specialty coverage only available through a surplus insurance lines carrier. These are companies that are highly specialized in non-standard or challenging areas of insurance.

Comparing Wholesale Insurance Quotes

Managing a complicated business is challenging, especially when it comes to risk management. You may have financial exposure in many areas: real and personal property, large inventories, and a fleet of trucks and goods in transit in many places and by many means.

By choosing a qualified insurance insurance agent, you'll have the peace of mind that your liabilities and risks are being properly managed.

If you're looking for more guidance, consider talking to a financial planner, accountant, or lawyer to help you understand your liabilities and assets and how best to structure protection for them.

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