Tool wholesalers & distributors insurance helps protect your business against third-party injuries, faulty products, damaged or stolen inventory, injured employees and other specialized risks. Get information on costs, coverage options and more.
Tool Wholesalers & Distributors Insurance
Hand tools, power tools, or a combination of both; if you are a tool distributor or wholesaler, no matter what type of products you handle, you are exposed to a variety of risks.
As the owner and operator of your tool distribution center or wholesale supply store, you are liable for anything that goes wrong. If an employee is injured on the job, you are responsible for any medical care he or she requires; plus, you will have to replace any wages the employee may lose while recovering from those injuries.
Or, if you a consumer files a product liability lawsuit because a tool you sold was defective and caused a physical injury or damaged property, you would be liable for any legal expenses and damages that a court may determine you are responsible for.
These are just some of the examples of the things that could go wrong. The cost of liabilities can be exorbitant; in fact, they can be so extensive that they could put you could end up facing serious financial trouble. To offset the costs that you may be responsible for, it's important that you invest in the right type of tool wholesalers & distributors insurance coverage.
Why Is Insurance Important for Tool Wholesalers & Distributors?
Given the vast array of risks that tool distributors are exposed to, being properly insured is the best way to avoid crippling financial losses. If you ever hit a bump in the road - if a third-party sues you, your commercial property is damaged, your inventory is stolen, etc - if you have the right type of insurance coverage, you wouldn't have to pay these expenses yourself; instead, the company that issues your policies would foot the bill for you.
In other words, insurance provides you with the financial protection you need from the long list of risks you face. Additionally, some types of tool wholesalers & distributors insurance coverage are mandated, meaning that you are legally required to carry them. Furthermore, being properly insured can help to boost the success of your business, as it lets your clients, vendors, employees, and anyone else you work with know that they will have access to the funding they need if anything that you are responsible for goes wrong.
What Type Of Commercial Insurance Do You Need?
Because of the extensive risks that businesses in this industry are exposed to, there are multiple types of tool wholesalers & distributors insurance coverage that company should have. Examples of some of the essential policies you should invest in include:
- Commercial property
- Product liability
- Commercial general liability
- Workers' compensation
- Commercial auto
- Business income
- Commercial crime
- Umbrella/excess liability
These are just some of the types of tool wholesalers & distributors insurance coverage you should carry. You can carry individual policies, or opt for a comprehensive policy that combines several different types of coverage under a single policy.
Minimum recommended coverages: Accounts Receivable, Business Automobile Liability and Physical Damage, Business Income and Extra Expense, Business Personal Property, Computers, Contractors' Equipment, Employee Benefits, Employee Dishonesty, General Liability, Goods in Transit, Hired and Non-Owned Auto, Umbrella, Valuable Papers and Records & Workers Compensation.
Other coverages to consider: Building, Computer Fraud, Cyber Liability, Earthquake, Employment-Related Practices, Equipment Breakdown, Flood, Forgery, Leasehold Interest, Money and Securities, Real Property Legal Liability, Signs & Stop Gap Liability.
Exposures And Risks Of Tool Wholesalers & Distributors
Property exposure come from multiple ignition sources, open construction, and the combustibility of packaging materials. Ignition sources include electrical wiring and equipment. All wiring must be well maintained and up to code for the occupancy.
Most tools are metal based with low ignition potential, damageability and combustibility. Power tools may include electrical components with more potential for damage from water used to put out a fire or from a sprinkler system. Good housekeeping and fire controls are critical. All stock should be racked and stored with adequate aisle space and limited stockpiling to prevent the spread of a fire. Smoking should be prohibited. If there is a sprinkler system, heads must be located high enough to avoid accidental contact with forklifts.
Recharging of forklifts and maintenance of vehicles should be done in a separate, ventilated area away from combustibles. Theft of power equipment can be a concern. Alarms, guards, fencing and other security precautions must be in place as appropriate to the location.
Crime exposure is from employee dishonesty. This operation involves a number of transactions and accounts that can be manipulated if duties are not separated. Background checks, including criminal history, should be performed on all employees handling money. Regular audits, both internal and external, are important in order to prevent employee theft of accounts.
Receipts must be provided for all payments and compared to money received. Electrical power equipment is attractive to thieves because of its high street value. Good security systems should be in place to prevent employee theft. Physical inventories should be conducted at least annually.
Inland marine exposure is from accounts receivable if the distributor offers credit to customers, computers for tracking inventory, contractors' equipment, goods in transit, and valuable papers and records for manufacturers' and customers' records. Duplicates must be kept of all data to permit easy replication in the event of a loss.
Contractors' equipment includes forklifts, cherry pickers, and hand trucks used for moving stored items. While goods may come to the warehouse via contract or common carriers or trains, items are generally delivered to customers on trucks owned by the distributor. Goods can be damaged during transit by collision or overturn.
Premises liability exposure is generally limited due to lack of public access to the storage facilities. If customers pick up goods, loading docks must be clearly marked and user-friendly. Customers should be confined to specific areas that are kept clean, dry and free of obstacles. Contracts with transportation and storage providers may expose the operation to additional liability. Railroad sidetrack agreements pose additional concerns.
If there is a railroad sidetrack or dock, an employee must verify that no one is in the path of an incoming or outgoing train. Railroad tracks and conveyors can be attractive nuisances. The premises should be enclosed by fencing with "No Trespassing" signs posted.
Products liability exposure is low if products are all from domestic manufacturers. Products should be marked for easy access in case of recall.
Commercial auto exposure comes from the salespersons' fleet and delivery vehicles. There should be a written policy on personal and permissive use of any vehicles provided to employees. All drivers must be well trained and have valid licenses for the type of vehicle being driven. MVRs must be run on a regular basis. Random drug and alcohol testing should be conducted. Vehicles must be well maintained with records kept in central locations.
Workers compensation exposure is very high. Lifting injuries such as back pain, hernias, sprains and strains are common so workers should be trained in proper lifting techniques and to use conveyances. Forklift and cherry picker operators must be properly trained. Shelving must be stable to prevent stored goods from falling onto workers. Floor coverings or coatings in the warehouse can pose slip and fall hazards. Housekeeping is critical. Salespersons and delivery drivers may be subject to holdup. Training must be provided to deal with such situations.
Insurance Classification Tool Wholesalers & Distributors
Commercial insurers classify tool wholesaler and distribution businesses using several coding systems. You can wind up paying a lot more for your insurance premiums if your distribution business is not properly classified:
- SIC CODE: 5072 Hardware
- NAICS CODE: 423710 Hardware Merchant Wholesalers
- Suggested ISO General Liability Code: 13715
- Suggested Workers Compensation Code: 8010
SIC Code 5072 - Hardware
Here is the official OSHA SIC code description:
Establishments primarily engaged in the wholesale distribution of cutlery and general hardware, including handsaws; saw blades; brads, staples, and tacks; and bolts, nuts, rivets, and screws. Establishments primarily engaged in the wholesale distribution of nails, non-insulated wire, and screening are classified in Industry 5051.
- Bolts, nuts, rivets, and screws-wholesale
- Fasteners, hardware-wholesale
- Handtools, except automotive and machinists'precision-wholesale
- Hardware, heavy-wholesale
- Hardware, shelf or light-wholesale
- Locks and related materials-wholesale
- Power handtools-wholesale
- Saw blades-wholesale
- Washers, hardware-wholesale
Get A Wholesalers And Distributors Insurance Quote
Not all tool wholesalers & distributors insurance polices are the same. If you are shopping for new insurance, or just want to see if you have the best fit policy, let one of our expert agents take a look at your situation. In most cases we can save you money and offer you better policy options than you currently may have.
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