Insurance For Wholesale Food Distributors

Insurance For Wholesale Food Distributors

Between the management of equipment, inventories and facilities, wholesale food and beverage distributors face a number of unique risks in addition to the usual business risks. 

Who Needs Distributor Insurance?

Any business that deals in the wholesale or distribution of food or beverages should have distributor insurance, including:

  • Food distributors
  • Beer distributors
  • Importers

Food and Beverage Distributor Insurance

Food and beverage distributors should have a number of insurance policies to cover their risks, including but not necessarily limited to:

Business Owner’s Policy (BOP)

Small wholesale and distribution companies typically have a Business Owner’s Policy (BOP). A BOP combines three of the most important coverages into a single policy:

  • General liability: Provides coverage if someone sues your business for causing property damage or bodily injury.
  • Business income: Provides income if your business cannot run because of a covered peril.
  • Commercial property: Covers your business’s physical location as well as equipment that you own or rent.

A BOP will cover a number of significant risks. However, distributors will need additional coverage to further lower risk.

Commercial Auto Insurance

Along with BOP, distributors should have commercial auto insurance if they have a fleet of company vehicles.

If an employee gets into an accident while delivering an order in a company vehicle or carrying out another task while on the job, commercial auto insurance will cover the cost of damage and injuries.

A commercial auto insurance policy will include the following coverage:

  • Property damage liability: Covers damage caused by you or an employee to someone else’s property.
  • Bodily injury liability: Pays for the other driver’s medical expenses in case of an accident.
  • Collision: Will cover the cost of repairing or replacing your business’s vehicle if you hit another vehicle or object (e.g., a pole).
  • Medical payments: Covers the cost of medical expenses for employees and their passengers in case of an accident, including medical treatment, rehabilitation and funerals.
  • Underinsured/uninsured motorist: Covers the cost of medical expenses or repairs if the other driver lacks coverage or does not have any coverage.
  • Personal injury protection (PIP): Covers lost wages, medical expenses or funeral costs after an accident regardless of who is at fault.
  • Rental car: Provides liability coverage if you or an employee are driving a rental vehicle for business purposes.
  • Hired and non-owned auto: Provides lawsuit liability coverage if you or an employee are in an accident while operating a personal, leased or rented vehicle for business purposes (does not cover damages to your vehicle).

Commercial Property Insurance

Commercial property insurance is typically included in a BOP policy. However, distributors can also purchase this policy separately.

Commercial property insurance will cover the cost of damage to an owned or rented:

  • Building
  • Tools
  • Equipment
  • Personal property
  • Inventory
  • Furniture

Wholesale food distributors operate out of physical locations and there is always a risk of liability in these facilities. For this reason, having commercial property insurance is crucial.

Workers’ Compensation Insurance

If your business has employees, you will need workers’ compensation insurance. Only one state does not require workers’ compensation coverage, so in most cases, this insurance is required by law.

Workers’ compensation will cover the cost of medical treatment for employees who are injured on the job or develop a work-related illness. Specifically, this insurance can provide coverage for:

  • Lost wages
  • Medical expenses
  • Rehabilitation

Transit Business Income Insurance

Wholesale food distributors face a number of risks when property is in transit. Transit business income insurance can help cover losses if damage occurs while property is in transit and business is disrupted as a result.

These are some of the most common insurance policies that distributors will need, but you may also have unique risks that need to be addressed with other policies.

Optional But Beneficial Insurance Policies

Distributors can also purchase additional insurance policies that provide beneficial coverage, including:

Commercial Umbrella Insurance

A commercial umbrella insurance policy is often worth the investment. Once a policy’s limit has been reached, an umbrella policy kicks in to reduce or eliminate out-of-pocket costs.

This type of insurance is ideal for protecting against costs associated with lawsuits for:

  • Customer property damage
  • Customer injuries
  • Employee injuries

Cyber Liability Insurance

In today’s digital world, no business is safe from data breaches, including wholesale food distributors.

A cyber liability policy can help businesses recover from data breaches and cyberattacks. If your business stores customer credit cards or other sensitive data, this type of insurance is recommended. It can help cover the cost of:

  • Data breach investigations
  • Fraud monitoring
  • Customer notification costs

Wholesale distributors can benefit most from first-party cyber liability coverage, which will provide coverage for threats at your own business.

How Much Does Distributor Insurance Cost?

Cost is one of the biggest concerns distributors have when purchasing insurance. While insurance will add to your overall costs, it also provides vital coverage that will either be required by law or help prevent your business from going bankrupt.

Let’s take a closer look at insurance costs for distributor businesses:

Business Owner’s Policy

For a BOP, the median cost for wholesalers is $110 per month, or about $1,325 per year. Only 29% of businesses will pay more than $2,000 per year for this coverage, and most (36%) pay less than $1,000 per year.

General Liability

General liability is one of the most important coverages for business. Wholesalers pay, on average, $45 per month for this coverage, or about $542 per year. About 29% of wholesalers will pay more than $800 per year for general liability coverage.

Most wholesalers purchase liability policies with a per-occurrence limit of $1 million and a $2 million aggregate limit.

Workers’ Compensation

The median cost of workers’ compensation coverage is $122 per month, or about $1,465 per year. A large percentage of wholesalers (42%) pay more than $2,000 a year for this coverage.

Commercial Auto Insurance

For a commercial auto insurance policy, wholesalers typically pay less than $30 per month for coverage, which equates to $339 per year. But, of course, the cost will largely depend on the number of vehicles that need to be covered.

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