Being in the wholesale industry often means storing huge inventories of product under the same roof, essentially keeping all your eggs in the same basket. Whether you are a lighting fixture supplier or a footwear distributor, staying in business means keeping that basket safe and properly insuring it against risk. Here are some ways you can protect your inventory, people, and equipment so you can deliver on your promises and maintain strong relationships with your customers.
Strategies for Reducing Risk
Accidents happen, but reducing the accidents, injuries, and other incidents that could disrupt your business operations can positively impact your safety record, reputation, and bottom line. Here are some practices you can put into place to reduce risk for your wholesale business.
- Develop a security plan: As part of your security plan, confirm that locks and security equipment work properly. Install high-intensity lighting in the parking lots and at building entrances and exits, and use security cameras to monitor the inside and outside of your location. Restrict access to the building after hours, and do not permit staff to share keys, PINs, or alarm codes.
- Protect against fire: Equipping your space with automatic sprinklers, smoke detectors, fire doors, and extinguishers can keep a minor spark from turning into a disruptive inferno. Inspect, maintain, and test equipment on a regular basis to make sure it is in good working condition. Post evacuation plans and clearly mark escape routes so employees and others can quickly get to safety.
- Practice a culture of safety: Your facility is a hub of activity, so make sure employees are safe as they load and deliver goods. Train workers on how to properly operate equipment and handle materials. Ensure spaces are well-lit, clearly mark potential hazards, and keep areas clean and clutter-free.
- Prepare for a product recall: Even if you don’t produce the goods that you sell, you could be held liable if your merchandise falls short and causes harm. Your recall plan should document quality control policies, procedures for initiating a recall, and processes for notifying affected parties and stopping the shipment of recalled inventory.
- Implement a fleet safety program: Even if you have only one or two delivery trucks, having a fleet safety program can help prevent accidents and keep your drivers safe. Check employee driving records, maintain your vehicles, and enforce safe driving practices like wearing seat belts and following the speed limit.
If you’ve had accidents in the past, take a hard look at the causes and adjust workflows or procedures as needed. Sometimes it takes a fresh set of eyes to recognize hazardous practices or patterns. Some insurers offer risk control services to help you learn how to proactively protect your people and assets from harm.
Must-Have Insurance Coverage for Wholesalers
The first step to ensuring adequate insurance coverage is assessing your exposure points. After that, it’s just a matter of finding the coverage to match these risks. A good starting point is a business owner’s policy (BOP) or commercial package policy, which can combine property and general liability insurance in a single solution. This coverage can help protect your business if a fire or other hazard destroys your facility, shelving, or equipment. A BOP or package policy can also help protect you from liability if a customer is injured at your location, if an employee making a delivery damages a customer’s property, or if someone is injured by the product you sell. To address the other challenges your wholesale business faces, you may also want to consider the following coverages.
- Business income-dependent properties: If you depend on others’ goods to stock your shelves and fill orders, coverage can replace lost income if this property is damaged and unavailable to you.
- Commercial auto: Whether you have a handful of vehicles running between your office and warehouse or a fleet distributing goods cross-country, you’ll need a commercial auto policy to make sure you’re covered in the event that one of your vehicles is damaged, stolen, or responsible for an accident or injury.
- Contract penalty: If you suffer property damage and fail to meet the delivery timelines of a contract as a result, coverage can help cover the penalties your business faces.
- Equipment breakdown: Standard property insurance may not cover the mechanical failure of your equipment. This insurance can cover the repair or replacement and can even cover lost revenue during downtime, extra expenses to continue running your business, or the lost value of spoiled products.
- Motor truck cargo: Whether you’re in the business of motor vehicle parts, lab equipment, clothing, or footwear, your inventory is always on the move. This type of inland marine insurance helps protect goods that you transport for others or your property that third parties carry for you.
- Product withdrawal expense: If your business faces a product recall, this insurance will cover costs to notify affected parties; ship, store, or dispose of defective merchandise; and pay for overtime or added personnel to manage the recall.
- Umbrella: Standard liability policies come with limits. If you’re concerned that you might need additional coverage, consider umbrella insurance. It extends your liability coverage by a significant amount at a reasonable cost.
- Workers compensation: This coverage is required in most states for businesses with employees. Workers compensation insurance helps cover an injured worker’s lost wages and medical treatment and also provides return-to-work support.
Some of these coverages may be included as part of a BOP or commercial package policy, so talk to your independent agent to find out more.
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