Common Types of Warehouse Insurance That You Need
On the surface, running a warehouse may seem like an easy business. You just have to buy a big building, install some shelves and racks, and then hire some workers, right?
Running a warehouse business is actually a bit more complex than that. As a warehouse business, you’ll likely be responsible for dealing with other businesses’ products, which means that there’s a lot of financial liability that you’ll be on the line for if you or your employees make any mistakes. This is why insurance for warehouse storage businesses is so important.
Without proper warehouse business insurance coverage, then you could be left on the line for tens or even hundreds of thousands of dollars worth of products if stacks of items are dropped, equipment causes property damage or personal injuries, a negligent employee crashes a forklift into a shelf, a fire breaks out, or somebody forgets to lock the door and products are stolen.
That said, different things could go wrong inside a commercial warehouse, so we’ll take a few minutes to look at the various types of warehouse insurance that will be useful.
Warehouse Liability Insurance
Liability insurance protects your warehouse from claims made by third parties. This has many types. For warehouse businesses like yours, the liability insurance most companies offer is general liability insurance.
Warehouse general liability insurance is designed to protect you from claims that will come from vendors, visitors, clients, and other third parties. The language of general liability insurance includes these perils:
Third-party bodily injuries - An employee is working to stack items in the warehouse. The stack of items suddenly tumbled and fell. A client was walking by and got buried in the pile of items, thereby sustaining a concussion. General liability insurance will pay for medical expenses if the injured client files a claim
Third-party property damage - The cargo van of a logistics company is parked outside your warehouse. Your employee while driving a forklift lost control and crashed into the cargo van. If the logistics company demand payments for the damage the cargo van incurred, general liability insurance will pay on your behalf
You should know that aside from paying the amount aggrieved parties want. General liability insurance also takes care of attorney fees and other legal costs if legal action is taken.
Personal injuries and property damage aren’t the only perils general liability insurance covers. General liability insurance will also take care of advertising or reputational harm through its advertising injury coverage. Advertising injury coverage will cover attorney fees, other legal costs, and compensatory payments if a third-party files a claim against your warehouse for slander, libel, and reputational harm.
Rented premises liability coverage is another add-on to general liability insurance. Its job is to help a renter reimburse the losses of the property owner if fire damages a rented or leased space. Consider adding rented premises liability coverage if you’re renting a building to accommodate more items from clients.
Read more about commercial general liability insurance
Warehouse Legal Liability Insurance
Warehouse legal liability coverage, also known as warehouseman legal liability insurance and warehouse keepers liability insurance, will provide protection if the items of clients inside your warehouse get damaged because of fire, theft, vandalism, and other covered perils.
Warehouse legal liability insurance excludes coverage for items that were damaged to spoilage or expiry. But still, you can include this exposure in the policy’s terms by getting spoilage endorsements.
Warehouse Building Insurance: Commercial Property Insurance for Warehouse Businesses
Warehouses are large structures and are often very expensive. Your warehouse building might get damaged or destroyed, and you’ll surely experience significant losses or might even be forced to stop doing business. And so, get warehouse property insurance because it will ensure that the building is protected against anything that could possibly happen to it.
So how does warehouse commercial property insurance help? Commercial property insurance has two primary functions:
Reimburse losses if fire or extreme weather destroys your warehouse’s building. The amount of reimbursement you’ll receive is equal to the building’s current market value or original market value
Reimburse losses if fire, extreme weather, theft, vandalism, and other covered perils damaged your warehouse’s building. The amount of reimbursement you’ll receive is equal to the value of the damage incurred
Your warehouse has pallet jacks, conveyors, forklifts, hand trucks, service carts, and other items considered as tools and equipment. Just like your warehouse building, these might get damaged or destroyed. Commercial property insurance will take care of such exposure with its business equipment and tools coverage. Business equipment and tools coverage will reimburse losses if fire, theft, vandalism, and other covered perils destroyed or damaged the equipment and tools of your warehouse.
Warehouse to Warehouse Insurance: Marine Cargo Insurance for Warehouse Businesses
If you own multiple warehouses and plan on moving goods between the warehouses, you’ll want to ensure that the goods are insured during their transit from one location to the next.
Often, the trucking and logistics companies that handle transportation will have their own form of inventory insurance, but it’s never a bad idea to have your own coverage as a backup in case the trucking company is unable to cover the costs of a claim completely.
So what insurance policy will cover instances where goods get damaged or lost while they’re being transported from your warehouse to another warehouse? Marine cargo insurance.
Marine cargo insurance has a warehouse to warehouse provision. A warehouse to warehouse provision protects the items from your warehouse against theft, vandalism, fire, and other covered perils, starting from departure, transit, and up until arrival at the receiving warehouse.
Business Owner’s Policy for Warehouse Businesses
A business owner’s policy is an insurance product that combines general liability and commercial property insurance. Depending on which carrier it’s from, a business owner’s policy might also include business interruption insurance or workers' compensation insurance in its terms.
Warehouse Workers Compensation Insurance
Your employees might suffer from a work-related injury or disease. Of course, you’ll have to pay for their treatment, rehabilitation, hospitalization, and lost income compensation. Do otherwise and employees might sue you.
Of course, you don’t want to spend business funds or personal funds when taking care of an injured or sick employee. In connection, workers' compensation insurance makes this possible.
Workers' compensation insurance is a state-mandated coverage. If an employee gets injured or sick because of work, workers' compensation insurance will pay the cost of treatment, hospitalization, rehabilitation, and lost income compensation.
The lost income compensation workers' compensation insurance provides is equal to two-thirds of the average weekly wage. This means that if an employee earns $1,455 per week, the lost income compensation to be received will be $974.85.
Workers' compensation insurance provides coverage if the employee dies from his/her injury or sickness. The policy will pay for funeral expenses and will give death benefits to the dependents.
Is Workers Compensation Insurance Important for Warehouses?
Workers' compensation insurance is absolutely important. The Bureau of Labor Statistics states that the incidence rate of work-related injuries in warehouses is 4.8. This means that per 100 employees, nearly half will suffer from a job hazard. In connection, there are many reports that provide accurate insights on how warehouse employees might get injured or even die. Here are some examples:
| Incident Date | What Happened? |
|---|
| January 24, 2017 | Three employees were taking objects from warehouse shelving. Two of them were working from a cherry picker that was raised 20 feet. On the other hand, the third employee was left to operate the turret. For some reason, the turret hit the cherry picker. The operator was thrown from the vehicle. As for the cherry picker, it overturned with the two employees still tied off to the cage. All three employees got hurt and they were hospitalized and received treatment |
| June 29, 2017 | An employee was backing up with a loaded forklift. He then started to turn but changed his mind. This caused the forklift to overturn. As a result, The employee was stuck between warehouse racks. This resulted in a compound fracture to the left leg. The employee was taken to the hospital and treated for his injuries |
| June 30, 2017 | An employee was checking the quality of a door line. While doing this, she fell on the warehouse floor from a considerable height. The result of this was a twisted ankle and a fractured hip. She was taken to the hospital for a hip replacement surgery |
| October 25, 2017 | An employee was driving the forklift for a large company. As he was about to get off the forklift, a strap that was loosely hanging from his wand was caught by the wheels. The employee’s hand was pulled toward the forklift wheels. This resulted in severe amputation of the fingers |
| December 15, 2017 | An employee was securing a leaking super sack where a second super sack is stacked on top. While doing this, the stacked super sack fell on the employee. The employee sustained a compressed and fractured vertebra and spinal cord hematoma. The employee was hospitalized as he experienced lost sensation in the lower body and nerve damage
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Warehouse Inventory Insurance
Last but not least, you’ll need insurance for goods in warehouse. This type of coverage protects you and your business from any damage that happens to inventory that’s outside of your control. Damage could come from severe weather, vandalism, or theft. Often referred to as warehouse contents insurance, this type of coverage ensures that you and your business won’t be financially liable if products are lost or damaged.
