Warehouses offer long and short-term storage services to both businesses and natural persons for all types of movable property. The term of storage varies from a few days to several years. Services may include packing, pickup, delivery, and unpacking as well as storage. Some sell boxes and packaging supplies.
if anything happens to the warehouse, the goods’ owner will probably file compensation claims against the operator. Therefore, each warehouse in the United States, be it for food, equipment, machinery, or cosmetics, should maintain a valid warehouse insurance policy throughout the year.
Warehouse Legal Liability Insurance
Warehouse legal liability insurance is insurance that protects warehouse storage operations from adverse external influences. It covers a business as a bailee because a warehouse business is entrusted with safekeeping other businesses’ property. A warehouse insurance policy thus protects the property stored in a warehouse from direct physical loss or damage. Property damage may occur during storage, cross-docking, packaging, labeling, etc.
How Much Does Warehouse Insurance Cost?
The average price of a standard $1,000,000 to $2,000,000 General Liability Insurance policy for small warehouses ranges from $77 to $109 per month based on the storage facility’s location and size. Just like any standard commercial property insurance, the warehouse insurance’s cost also depends on the operator’s payroll, sales, and experience.
The Hartford Warehouse Insurance
The Hartford provides its customers with industry-leading claims handling experience. Their team of risk management experts and insurance specialists efficiently handles a wide variety of warehouse legal liability claims.
The company offers round-the-clock customer support to take the burden of customer claims off your warehouse business’s shoulders. This is just one of the reasons why customers rate their claims experience with The Hartford with 5 stars.
Carrier Logistics Choice insurance from The Hartford can be added to your warehouse legal liability insurance to optimize the process of covering goods while they are in a policyholder’s warehouse or in transit.
Under The Hartford Inland Marine Insurance, their Warehouse and Logistics Choice policy provides optional coverage that helps businesses protect cargo in both their main warehouse and other overflow warehouses. Thus, businesses possess the flexibility to expand their operations across states or shrink their capacity in times of market stagnation.
Warehouse Operator’s Risks & Exposures
I shall take a closer look at the different warehouse insurance coverages shortly. But first, let me highlight some of the most common risks and exposures that warehouse managers should consider while shopping for quotes.
Warehouse Employees
Warehouse operators’ legal liability depends on the clauses and conditions in the contract between the storage facility and its customers. These terms and conditions should clearly spell out who is responsible for damage to the stored goods. Any items in storage must be marked to prevent incorrect or unauthorized release. A Goods-in-transit coverage is needed if the business operation includes pickup and delivery of customers’ goods.
Premises liability exposure
To minimize the premises liability exposure, warehouse managers must limit customers’ access to designated waiting areas. The warehouse’s employees should take appropriate measures to customers’ slips, falls, and other accidents related to negligence.
Workers compensation exposure
Warehouse businesses must maintain a valid workers compensation insurance policy all year round because the risk of employees’ injuries is very high. These injuries include but are not limited to lower back traumas, spinal discus herniations, wrist and ankle sprains, etc.
In addition, prolonged standing for packing or unpacking activities can cause various musculoskeletal disorders of the employees’ backs, legs, or feet. Front desk officials are exposed to eyestrain, neck strain, and repetitive motion injuries. Warehouse sanitation workers can develop respiratory ailments or skin issues.
Warehouse Owners Insurance Coverage
The warehouse insurance policy provides a range of different coverage options to help protect warehouse owners against losses that may occur as a result of the movement and storage of goods entrusted to them as bailees.
Warehouse Insurance Coverage Options
A standard warehouse legal liability insurance coverage spans any tangible movable property that a policyholder’s business might accept as a warehouse operator or bailee. Depending on the insurer, the policy’s coverage may vary. The Hartford, for example, offers up to $50,000 to cover damages to the following inventory:
- Power tools
- Forklifts
- Rack systems
- Hand trucks
- Computers & hardware
- Networking systems
This type of warehouse insurance protects all third-party items that you store in your warehouse. Your customers are paying a fee for their items to be stored and kept safe. Therefore, every warehouse operator must exercise reasonable care.
Reasonable care is an expected part of your warehousing service. If a customer’s item is damaged, then you could be held liable and pay thousands of dollars in legal fees and compensations. Therefore, warehouse managers should hold valid warehouse legal liability insurance.
Commercial Property And Liability Insurance
Before a warehouse operator can protect a third party’s possessions or goods, they should cover their commercial property with adequate business insurance. The business. property insurance protects your storage buildings and the goods in them.
If anything in your warehouse is destroyed or damaged, you are protected by your business insurance. The Commercial Property and Liability coverage shields all of your business assets from external and internal risks. The commercial general liability insurance protects your business from slip and fall claims from customers or vendors when they are on your business property.
Accounts Receivable
If a covered loss results in direct physical damage to a warehouse’s electronic records, the warehouse’s legal liability insurance may cover payments due from customers that the policyholder is unable to collect. The accounts receivable coverage also covers costs that warehouse owners may incur while restoring or replacing missing accounts or receivable records.
Valuable papers, data, and software
In addition to accounts receivable coverage, a warehouse legal liability insurance policy protects valuable papers, data, and software from damage or a loss. If valuable papers, data, or software get lost, damaged, or destroyed, the insurance company may pay up to $10,000 to recover recovery expenses.
Physical loss or damage to new property
Warehouse operators who purchase legal liability insurance from The Hartford can rely on up to $500,000 to cover legal liability for physical loss or damage to newly acquired property for up to 90 days.
Damage or loss of equipment in leased buildings
The Hartford’s warehouse liability insurance includes $25,000 to cover direct physical damage to, or loss of, fixtures and equipment installed in a leased or rented building.
Additional warehouse legal liability insurance coverage options
Goods in warehouses may be damaged in a possible fire, flood, and other manmade or natural disasters. Warehouse insurance protects your goods from these risks, but the time they spend in the warehouse opens the door to theft and possible mistakes in tracking inventory. You can purchase some additional coverage options from The Hartford or another insurance agent of your choice.
Earned storage and freight charges
A standard warehouse legal liability policy provides up to $25,000 in coverage for earned storage and freight charges that a policyholder is unable to collect due to a covered loss.
Debris removal and pollution cleanup
Ask your insurance agent if their legal liability also provides insurance coverage for debris removal and pollution cleanup. Some insurance agents like The Hartford provide up to $50,000 or 25% of the amount payable for a physical loss before the deductible against expenses related to debris removal. If an insured business needs to clean up a polluted area following a covered accident, a valid warehouse and logistics insurance policy may provide up to $25,000 per policy to facilitate the cleanup process.
Losses Resulting from adverse temperature influences or humidity
Under the United States Uniform Commercial Code (UCC), a warehouse owner is responsible for the goods they store for a third party for a fee. If a facility experiences an incident and the customer’s goods get damaged, the warehouse owner can be held liable for failure to exercise reasonable care over their property.
This type of insurance covers damages resulting from adverse changes in temperature or humidity caused by a warehouse’s faulty air conditioning system. This addition to your basic warehouse legal liability policy can provide up to $50,000 to help cover the losses.
The legal liability coverage of warehouse insurance extends to claims arising from theft, fire, flood, roof collapse, missing inventory, damage during handling, insufficient facility maintenance, trailer theft, and a number of other causes.
Missing property
In the event that covered property goes missing, warehouse operators can rely on their general liability insurance policy to provide up to $50,000 in missing property coverage.
Insurance Companies
In addition to The Hartford, warehouse businesses can rely on some other insurance providers to cover them against warehousing’s most common risks. The big players in the field are AXA XL and Trustedchoice, to name two.
Some insurance companies add general liability to their insurance packages as well. As every small business with employees, a warehouse needs to have its staff covered against bodily injury while at work. Therefore, every warehouse owner needs to have valid workers’ compensation insurance.
Warehouse Liability Protection
A standard warehouse insurance package provides insurance carriers with liability coverage for businesses that provide truck transportation of a third party’s products. This coverage is added to the standard commercial auto insurance.
Property on policyholders’ truck fleet
Warehouse insurance policies typically provide carrier liability coverage for businesses that transport third party’s goods by truck. This liability coverage is not limited to only goods that are in transit. It also extends to any tangible property that is in the policyholder’s custody and control, including property-loaded trucks that the policyholder leases.
Property transported by third-party vendors
The warehouse legal liability insurance of your small business can include a contingent carrier’s liability. This means that policyholders can hire third-party vendors to transport their property and still avail of the full coverage of their warehouse’s legal liability policy.
Unscheduled premises
The Hartford provides the unscheduled premises benefit as an add-on to their warehouse insurance policy. This benefit helps extend liability coverage to other warehouse operators with whom the policyholder may be storing customers’ property. The unscheduled benefit allows warehouse businesses to take on more work without having to upgrade their policy, should they exceed their warehouse’s capacity.
Employee dishonesty
You should ask the designated insurance specialist if their warehouse insurance provides coverage for employee dishonesty. In the event that there is a direct physical loss of covered property due to fraudulent or dishonest acts on the part of a policyholder’s employees, the warehouse liability insurance can help cover the damages that such behaviors may have caused.
Warehouses And Storage Insurance FAQ
Here are some of the most topical questions related to storage and warehouse insurance packages that I could find.
What Kinds Of Insurance Do Warehouse Businesses Need?
As with any other business, a warehouse business needs to maintain a valid general liability insurance policy all year round. I have not seen a warehouse without employees, so I guess it’s going to need workers’ comp insurance in most states.
Storage and warehousing services usually go together with transportation services. So, if the warehouse business has vehicles registered to its name, or uses vehicles for commercial purposes, the owner must purchase commercial auto insurance as well.
Does my warehouse business need inland marine insurance?
Warehousing is one of those businesses for whom the standard property insurance provided by the Business Owners Policy (BOP) or Commercial Package Policy (CPP) may not be sufficient. However, these insurance packages cover property housed at a specific location.
if a third party’s property is temporarily in your possession, inland marine insurance can provide coverage against this property’s loss. This is known as Bailee’s Customer Coverage.
What kinds of Specialty Insurance do warehouses need?
Depending on the unique nature of some warehouses’ business operations, they may have some pretty unusual exposures, such as:
- Terrorism Insurance Coverage
- Solar Energy System Coverage
- Tax Liability Coverage
- Fiduciary coverage
Should you need any of these, do not hesitate to dial your insurance agent’s phone number and ask for relevant quotes!