Warehouse liability insurance will pay for any damage to or loss of the clients goods stored in your facility.
Illinois, Texas and California have their own bonded warehouse laws which mean that you'll need this sort of coverage in a public warehouse.
Insurance companies like Hartford, CNA, Zurich, and Great American all write business policies with liability limits ranging from $100,000 all the way up to $5 million. The value of the goods stored is a major factor in determining the cost.
The good news is Insurance Navy will compare rates from its large network of insurance carriers to get you the lowest price for your warehouse insurance coverage.
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Why do you need Warehouse insurance coverage for your business?
These are the following hazards and damages:
Property damage to products and equipment within the warehouse and on business grounds due to criminal activity, natural disasters, water damage or other weather hazards
Injuries and damages to third parties or individuals visiting the warehouse, along with damages that they unintentionally cause
Stolen property and products as the result of thieves breaking in
Damages and accidents involving a warehouse’s fleet of vehicles like trucks and vans
Damages and injuries involving warehouse workers during business hours
Equipment like forklifts, pallet jacks , and warehouse management system hardware breaking down or getting damaged and requiring repairs and replacements
Products and shipments arriving damaged to the warehouse during transit
The computer system that the warehouse uses to track shipments, inventories, and distribution is cyber-attacked, and data is breached.
A product in distribution can be recalled, which costs the warehouse and company a loss of income.
Warehouse legal liability pays out claims when your customers goods are lost, damaged, or destroyed while in your possession.
How much does Warehouse insurance cost?
Warehouse property insurance costs between $0.50 and $2.00 per square foot annually. For a 50,000 square foot warehouse you can expect to pay $25,000 to $100,000 a year for just the property coverage.
General liability insurance is another coverage your warehouse business should carry. You can expect to pay $400 to $1,500 annually for a small warehouse. For larger warehouses annual prices could range from $2,000 to $10,000.
Warehouse liability premiums are determined by the total value of customer goods being stored. This is calculated at a rate of $0.10 to $0.50 per $100 of the stored inventory's value.
A warehouse with a total value of goods stored at $2 million might pay $2,000 to $10,000 annually for liability coverage.
Getting all three of these coverages (property, liability, legal liability) bundled into a Business Owner's Policy will save you 10% to 15% rather than buying them separately.
Types of Warehouse Insurance Coverage
Warehouse Legal Liability Insurance
Warehouse Legal Liability Insurance protects warehouse owners against losses or damages to customers goods while they are stored in their facility.
Unlike standard liability insurance, which only covers your property, warehouse legal liability insurance covers your customers property.
It will cover a wide variety of perils such as theft, fire damage, water damage, and mishandling of customers inventory.
Commercial property insurance
This includes product, inventory, storage, and any equipment that assists with the organization and cataloging of them, like forklifts, pallet jacks, conveyor systems, and warehouse management hardware.
Coverage applies to general merchandise warehouses, cold storage facilities, automotive parts distributors, and food distribution warehouses. This coverage will protect against natural disasters, water damage, fire, robberies, and vandalism.
General liability insurance
Warehouse inspections and tours to see if they are up to regulation or a third party’s regular business visit can go awry if someone is injured or a worker damages their property.
If the goods you stored or handled end up causing an injury after leaving your premises then product liability & completed operations coverage kicks in.
Most general liability policies have a $1 million limit per incident, and $2 million in total coverage limit.
Workers compensation insurance
Workers comp covers medical bills, lost wages and disability for any employees who get injured on your property. Forklift operators, order pickers, and loading dock workers will have higher rates because of the frequency they get injured.
Illinois, Texas and California all have laws requiring businesses with employees to get workers comp. Warehouse workers comp premiums are calculated by each $100 of payroll wages.
NCCI code 8292 covers warehouse workers at a rate between $1.50 to $4.00 per $100 of payroll wages. This range will depend on the state and company's claims history.
A warehouse business with a payroll of $500,000 a year could pay between $7,500 to $20,000 for workers compensation coverage.
Commercial auto insurance
If your warehouse is sending out delivery trucks, box trucks or cargo vans, then you'll need commercial auto insurance.
This will cover liability in case one of your drivers causes an accident, damage to the vehicle, comprehensive for theft and weather damage, and also cargo coverage.
Commercial auto policies will also cover any rented or personal vehicles that your employees use for business purposes.
Insuring a box truck or cargo van will cost you anywhere from $3,000 to $8,000 a year. Your employees driving records, routes and the value of the cargo are determining your policies overall cost.
Additional types of Warehouse Insurance
Standard warehouse policies tend to have a few exclusions that need to be covered with separate policies or endorsements. The following is a list of the gaps in basic commercial coverage that you should be aware of:
Transportation and Inland marine insurance
There is always the chance of products and inventory getting to the warehouse broken or not in the promised condition.
Transportation coverage, also known as cargo insurance or inland marine insurance, covers products while they are in transit and protects against property damage during shipping. This can be when they are shipped by road, air, or rail.
Additional coverage may be necessary if the products and shipments come from overseas. The alcoholic beverage industry thrives with this coverage, considering all the glass bottles that must be moved.
Business income insurance
This coverage is also known as business interruption insurance.
When some disaster forces your place to shut down you'll be glad to have business income insurance. Business income coverage pays out for lost sales and keeps up with ongoing expenses like salary and rent.
Keep in mind, policies usually have a 3 day waiting period before they kick in. Coverage limits are based on your businesses annual revenue.
Product recall insurance
This type of insurance covers all the costs of getting defective goods back from your customers.
This covers the shipping costs to send them back, product disposal, product replacement on defective items, and hiring crisis management consultants to preserve your reputation.
The limits of this type of policy depend on how much stock you have on hand. They can range anywhere from 1 million to 5 million if there was a major recall.
Cyber liability insurance
If your company's computer system stores customer shipping addresses, payment data then you’ll need cyber liability insurance.
This will help you cover data breach notification costs, cybersecurity professionals to fix the problem, lost business from downtime and even a ransom to get your system back up and running.
Policies usually start around $1,000 per year for $1 million in coverage.
Equipment breakdown insurance
Equipment breakdown insurance will cover the costs of fixing or replacing equipment when it breaks down. Usually its thermostats, refrigeration units or conveyor systems that need major costly repairs.
Cold storage warehouses will benefit the most since food spoilage from broken refrigeration can cause losses of over $100,000 in just a days time.
Premiums can range from $500 to $2,000 a year and are based on how much your equipment is worth.