Wholesale Distribution Insurance

Wholesale Distributor Insurance 101: Here’s What You Need to Know

As a distribution business owner, you face many risks. Fire, floods, storms are always a potential risk to your warehouse. Thieves who target your inventory can also damage it while trying to steal it. And let’s not forget the parts of your supply chains, including unpaid deliveries and late shipments. All of this and much more can influence your income and financial stability. 

That’s where wholesale distribution comes in useful. From your warehouse inventory to products shipped to their final destination, there are many ways distributor insurance can help. Here’s what you need to know. 

Two men checking inventory in a warehouse.

Wholesale Distributor’s Risks

There are many issues and risks that wholesale distributors are facing daily. In these cases, one of the best ways to prevent these risks is to have insurance for wholesale distributors in place. Here are some of the situations and exposure that could happen to any distributor:

Property Exposures

Risks related to property come from various ignition sources and the flammability of stock and the packaging materials. These sources include equipment and electrical wirings. 

To any distributor, good housekeeping and fire controls are vital. That said, all stock should be stored with adequate aisle space and limited stockpiling to prevent spreading the fire. Furthermore, it is always advised to recharge forklifts and maintain vehicles in separate and ventilated areas, away from fire sources. 

Crime Exposure

Crime exposure involves different transactions and accounts that can be manipulated. 

Usually, distributors run background checks on their employees for this reason, including criminal history that is performed on all employees handling money. To prevent employee theft of accounts, it is important to perform regular audits as well. 

Another good piece of advice is to conduct physical inventory at least once a year.  

Inland Marine Exposure

If a wholesale distributor offers credit to customers, computers for tracking inventory, and valuable paper and goods in transit, there is a certain risk from inland marine exposure. For this reason, it is advised to keep all duplicates of all data in case they get lost. 

Premises Liability Exposure

Premises liability exposure is usually limited because of a lack of public access to the storage facilities. That said, loading docks should always be clearly marked as user-friendly, and customers should be confined to clean, dry, and obstacle-free areas. 

Products Liability Exposure

Products liability exposure can be low in case all products come from domestic manufacturers. Because of this, having product liability insurance is always recommended as well as having all products marked for easy access in case of a recall. 

Workers’ Compensation Exposure

Workers’ compensation exposure is very high with the wholesale distribution. There is a lot of heavy lifting, and the risks include back injuries, hernias, and sprains. Besides having wholesale distribution insurance, another good idea is to train your workers in proper lifting techniques. Forklift and cherry picker operators should especially be properly trained to prevent injuries on the premises.

Commercial Auto Exposure

The risks that are related to commercial vehicles come from the distributor’s fleet and delivery vehicles. That said, it is advised to have a written policy on personal and permissive use of any vehicles provided to employees. Just like with forklifts and cherry pickers, all drivers must be trained and have valid licenses for the type of car they are driving. Another good piece of advice is to conduct random drug and alcohol testing.

Types of Wholesale Distribution Insurance

Wholesale distributors often need more than one type of commercial insurance policy to cover everything they need to keep their businesses safe. Usually, there isn’t just one policy that does the job right. To ensure that your business is protected from various and unpredictable risks, you may need these insurance policies as well:


  • Commercial Auto Insurance: Commercial auto insurance is a crucial requirement for your business if you own or lease a vehicle used for business purposes.
  • Commercial Property Insurance: Commercial property insurance can be valuable for wholesale distributors because it covers physical locations, including shipping centers and warehouses.  
  • Commercial Umbrella Insurance: Commercial umbrella insurance presents an additional layer of coverage beyond your basic liability limits. 
  • General Liability Insurance: General liability insurance covers the costs in case someone gets hurt on your property.
  • Workers’ Compensation Insurance: Workers’ comp covers your employees. In most states, this policy is required, while in others, it should be considered as it can cover your business in case an employee is hurt or becomes ill on duty.

Other Types of Insurance Wholesale Distributors May Need

When it comes to insurance for wholesale distributors, there are also other types of policies that you might consider, based on your business model. These policies include: 

  • Business Interruption: If your business must cease all activities, this type of policy can help you keep your business operational. 
  • Flood: In most cases, property insurance doesn’t cover floods. If your business is located in a designated flood zone, this type of insurance can be especially helpful.
  • Data Protection: If someone hacks your business data, this type of policy can protect your business from data breaches that involve customers’ sensitive data and other valuable financial information

How Much Does Wholesale Distributor Insurance Cost?

Wholesale distributor insurance is usually inexpensive, especially when you consider the amount of coverage that it provides. 

The average price of a standard $1,000,000 / $2,000,000 General liability insurance policy for a small wholesaler distributor business ranges from $57 to $139 per month, depending on size, payroll, location, sales, and experience.

Furthermore, smaller distributors usually pay even less, as they can bundle their policies with a general business owner’s policy (BOP). 

However, when it comes to wholesale distribution insurance, your goal shouldn’t be to pay as little as possible. In this case, the point is to ensure your business is protected if something unpredictable such as fire, flood, vandalism, lawsuit, or theft happens. 

Finally, you can lower your rates by taking less coverage, but that could be something you might regret if the policy doesn’t cover the losses you sustained. Wholesale distributor insurance can be one of the best investments that could keep you in business after an adverse event. 

Did you like this article? If so, you might also want to learn more about construction insurance too.

Ready to Start?

Get matched with a provider that fits your needs today.