I own a wholesale distribution business — what insurance do I need?
A wholesale distribution business needs six core coverages: general liability, for people hurt at your site; commercial property, for building, racking and stock; product liability, for goods that injure someone; cargo and goods in transit, for goods on trucks or stored elsewhere; workers' comp, for staff hurt at work; and business interruption, for income lost after a loss. Two more depend on the business: commercial auto if you run delivery trucks, and ocean cargo if you import on terms that leave sea risk with you. An umbrella and employment practices liability, for lawsuits from your own employees, are common add-ons.
- Six core coverages carry most wholesalers, distributors and importers. Commercial auto and ocean cargo depend on the business; an umbrella and employment practices liability are common add-ons.
- A carrier's or a warehouse's liability for your goods is usually limited. The gap between that limit and what the goods are worth is yours unless you insure it.
- State law requires workers' comp and auto liability. Landlords, lenders and buyers' contracts ask for most of the rest.
Which coverages do I need, and who requires each one?
Six coverages for every wholesale business, plus five that depend on whether you run trucks, import, sell goods that can be recalled, keep stock cold or store goods for others. Only workers' comp and auto liability are required by state law. The others are asked for by landlords, lenders and buyers, or recommended.
| Coverage | Pays for | You need it if | Who requires it |
|---|---|---|---|
| Six core coverages | |||
| General liability | A driver, customer or visitor hurt at your site; property you damage | Anyone ever comes to your warehouse or dock | Landlords and buyers often ask |
| Commercial property | Your building (if owned), racking, equipment and stock after fire or theft | You own the stock, the equipment or the building | Lenders; your lease |
| Product liability | Injury or illness from goods you sold or imported | You sell anything someone could be hurt by | Buyers' contracts often ask |
| Cargo and goods in transit | Your goods on a truck, or held away from your premises | You ship goods, or stock sits in another's warehouse | Not required by law; recommended |
| Workers' comp | Medical bills and lost wages for staff hurt at work | You have employees | State law |
| Business interruption | Lost income and bills that continue after a covered loss | A month without deliveries would strain payroll or loans | Recommended; a lender may ask |
| Depends on your business | |||
| Commercial auto | Accidents in your trucks and vans | You own, lease or regularly use delivery vehicles | State law, for any vehicle you drive |
| Ocean cargo | Your goods while at sea | You import and the supplier's terms leave the risk on you | Not required by law; recommended |
| Product recall | The cost of pulling a product back: notifying buyers, retrieval, disposal | You sell food, supplements, own-label or children's goods | A buyer may ask |
| Equipment breakdown and spoilage | Repair of a failed cooler or freezer; stock that goes bad | You store refrigerated or frozen goods | Recommended |
| Goods stored for others | Damage to other people's goods in your care, which you owe their owners | You store or handle goods that belong to someone else | An owner's contract may ask |
Often, your landlord and lender will have specific insurance requirements you must meet to stay in compliance. Read the insurance clause in your lease and your loan before you buy anything. Our guides to warehouse lease requirements and vendor agreements explain what those clauses ask for.
What happens if someone is hurt, or my goods hurt someone?
General liability is designed to pay your defense and a covered claim when someone is hurt at your warehouse or dock. Product liability does the same when goods you sold or imported injure someone.
If you import, an injured buyer may be able to reach you when the maker overseas is out of reach. For consumer goods, the importer issues the safety certificate. (Source: Consumer Product Safety Commission) Ask your agent to show you where product coverage is written on your policy, and what its limit is.
What covers the building, the stock and my income?
Commercial property pays to repair or replace your building, racking, equipment and stock after a covered loss. Business interruption pays lost income and continuing bills while that loss stops your deliveries.
Fires that start between midnight and 6 a.m. were 18% of warehouse fires but 40% of the damage. (Source: National Fire Protection Association) The study leaves out refrigerated storage and warehouses attached to a store or factory. So keep your alarm and sprinkler records, because some policies make them a condition of coverage. Set the stock limit to your fullest month, and see what business personal property means for what counts as stock.
What covers my goods on a truck, at sea or in someone else's warehouse?
Cargo coverage pays for your goods while they move or sit away from your premises. Inland marineInland Marine Coverage for business property that moves or sits away from your premises, such as tools, equipment, or goods in transit. Insurers call it inland marine. more → is the policy form behind it.
A trucking company's and a warehouse's liability for your goods is usually limited, so you need cargo coverage for the gap. An ocean carrier's liability is generally capped at $500 per package unless the goods' nature and value are declared on the bill of lading. (Source: 46 U.S.C. 30701) Our guide to coverage gaps shows the caps, and our guide to goods in a third-party warehouse goes further.
Your sales terms decide who carries the risk while goods move. (Source: Uniform Commercial Code 2-509) If they leave it on you at sea, you need ocean cargo coverage. A domestic cargo policy may not cover the voyage. No law requires either.
Do I need workers' comp and auto coverage?
Almost certainly workers' comp, if you have employees. Workers' comp pays an employee's medical bills and lost wages after a work injury, and most states require it. Commercial auto pays for accidents in vehicles your business uses. State law requires liability coverage on any vehicle you drive.
Warehouse work hurts people more often than selling does: 4.8 cases per 100 full-time workers in warehousing (Source: Bureau of Labor Statistics, 2024), against 2.2 in wholesale trade (Source: Bureau of Labor Statistics, 2024). Tell your agent how your payroll splits between the two. Workers' comp laws by state has each state's rules, and our workers' comp guide for wholesalers covers the price.
The federal $750,000 liability minimum is written for carriers that haul other people's goods for pay. (Source: Code of Federal Regulations, Title 49, section 387.3) If you only deliver your own goods, ask your agent how the federal rule and your state's minimum apply to your trucks. If staff drive their own cars on errands or you hire carriers, ask for hired and non-owned autoHired and Non-Owned Auto Liability coverage for accidents in vehicles your business does not own, such as rentals or an employee's personal car used on a work errand. Insurers call it hired and non-owned auto. more → on top of your commercial auto policy.
What else might my business need?
Three more coverages depend on what you sell or store, beyond the two above, and three add-ons sit on top of the core six. No law requires them; a buyer, landlord or lender may ask for one.
- Product recall pays to pull a product back: notifying buyers, retrieval and disposal. It matters for food, supplements, own-label and children's goods, because product liability pays injured people, not that cost.
- Refrigerated or frozen stock. Equipment breakdown coverageEquipment Breakdown Coverage Coverage for the sudden mechanical or electrical failure of equipment such as a walk-in cooler, a boiler or an elevator, which a standard property policy leaves out. Insurers call it equipment breakdown coverage. more → pays to repair the machine that fails. Spoilage coverageSpoilage Coverage An add-on to a property policy that pays for stock that spoils when refrigeration fails or the power goes out. Insurers call it spoilage coverage. more → pays for stock that goes bad. See insurance for refrigerated stock.
- Goods you store for other people need their own coverage, because ordinary liability and property policies usually exclude them.
- An umbrella sits on top of your liability policies and pays when a serious claim runs past their limits. See umbrella coverage and how to tell if you need one.
- Employment practices liability pays when an employee sues you over hiring, treatment or firing.
- Cyber liability pays costs after a breach of the systems that hold your orders and customer data. See cyber liability coverage.
To check your limits, see is this enough coverage? To price the program, start with what to prepare for a quote and what the insurance costs.
Common questions about what insurance a wholesale distributor needs
Often yes, because your stock still travels to you. Goods arriving from a supplier, or held at a third-party warehouse, sit outside your premises. Your purchase terms decide who carries the risk on the way in.
Many general liability policies include some product coverage, but the limit and the wording differ. Ask your agent to show you where products are covered and what the limit is. An importer should check this first.
No. Goods can be entered by the owner, the purchaser or a licensed customs broker they name, and the importer must use reasonable care. Tell your agent whose name is on the entry. (Source: U.S. Customs and Border Protection)
Find out which of these your wholesale business actually needs
Tell us what you buy and sell, where the goods sit, whether you import and whether you run trucks, or send us your current policies, and we will show you which coverages fit and where the gaps are.