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Business Insurance for Wholesaling
Wholesale businesses can range from the fairly simple to the very complex. Either way, insurance is something which needs to be considered. If your business is wholesaling products there are a range of risks that need to be insured against. In this guide I’ll run through those risks and the types of insurance available to combat them.
As a wholesaler you are open to a range of risks, but there are two in particular that will be at the top of most wholesalers’ lists. The first is that your stock is lost or damaged. This could be through fire, storm, theft or a range of other events. The second is the risk that a product you supply results in property damage or personal injury being suffered by another person. Aside from these two issues there are also a number of general risks which apply to any business type, such as someone injuring themselves on your premises or having your business property lost or damaged.
Thankfully there is a range of insurance solutions to suit wholesaling businesses. We have listed some of the major forms of business insurance below, however there are other types of cover which a business may require depending on their own needs.
Public liability is arguably the most important form of insurance for a wholesaler, or any business type for that matter. This form of insurance will protect you if your business activities result in property damage or personal injury to another person. This risk could range from a visitor to your warehouse suffering a ‘slip and fall’ type injury on your premises, to one of your own workers causing property damage whilst at a customer’s premises.
In most cases product liability will be included in the public liability insurance policy. As a wholesaler you could find yourself legally liable for the products you supply, especially if you are importing the products yourself. A wholesaler may argue that they are not the manufacturer and are therefore not responsible for property damage or personal injury caused by the products they supply, but this is not the case. If you are the importer, then for insurance purposes you are regarded as being the manufacturer and will be liable for any losses relating to the products you supply. This means that if you import a product which results in personal injury or death, you will be liable for all costs awarded by the courts which can potentially climb into the millions of dollars.
A relevant case worth looking at is that of a toy importer in Australia whose products put a number of small children in hospital. You can read more about the case here. Although they did not manufacture the products, they were still dragged through the courts along with their insurance company. Even if you don’t import or manufacture any products yourself, you could still find yourself liable.
For example let’s say you were wholesaling products manufactured by another company in Australia, and one of those products was found to be faulty and resulted in personal injury to one or more people. Ordinarily the responsibility would be on the manufacturer, but what if the manufacturer had since gone out of business? In this case you may find yourself as the wholesaler ending up with the liability and therefore required to pay costs which could end up sending you out of business too.
A far better option is to have the appropriate product liability coverage in place and let the insurer take care of the claim. With more and more Australian manufacturers failing due to the high dollar and other factors, this scenario is even more important for wholesalers to think about.
As a wholesaler you will most likely have somewhere that you store your products. Whether you store these products in the spare room of your house or in a football field sized warehouse, it is important to insure your goods from theft, fire and other perils. As part of a business insurance package you can insure your products as well as your general business contents from a range of risks including theft, fire, storm, lightening and even flood depending on the individual policy. If you are transporting your products around the country, or are having them imported from overseas, you will also need to insure them whilst they are in transit.
Other Forms of Insurance
There are many other forms of insurance that can be important for wholesaling businesses. Whilst we cannot list them all here, we do recommend that you speak with an insurance broker about your needs.
Importing and Exporting
We have already touched on some issues with regards to importing, but there are further considerations for wholesalers who import or export goods. If you are exporting goods, it is important to let the insurance company know which countries you are exporting to. There are generally no restrictions on which countries will be covered under a typical policy, however there is one notable exception which is North America.
Most policies will exclude exports to the USA and Canada, so if you are exporting to these countries make sure you let your insurance broker know so that they can find you a suitable policy. When it comes to importing there are generally no restrictions on the countries you import from, but the insurer will still want to know the countries in most cases. The insurer may also require information about the quality control measures you have in place once the product has landed in Australia.
There are a few ways to get more information about insurance for your wholesale business. Your insurance broker should be the first port of call. If you don’t already have a broker you can contact us on 1300 542 245 and we put you in contact with one of our experts.
It is also possible to request an insurance quote online, however for more complex businesses such as wholesalers it is generally better to speak with a broker. You can always get the ball rolling with an online quote though.