As a key stakeholder in your organization, it is important to ensure that your organization is properly covered in case anything goes wrong as you conduct your operations. As a wholesaler, you must be able to adequately protect yourself from property liability, and your inventory from theft and damage. But how much should you be paying for insurance? How much can you expect any claims that do occur to cost, and how often should these incidents be happening? Read more to find out how your wholesaling business compares to industry-wide averages.
Cost of Insurance
All business owners need general liability and property insurance, which typically costs between $500-$2000 per year. Property insurance is likely the most important for you as a wholesaler, so be sure you’re paying a premium that accurately reflects how much your losses will be if something drastic happens to a large percentage of your inventory. For your employees, you will have to pay worker’s compensation insurance, which averages $430 per person. You should also purchase auto insurance if you own the delivery vehicles, which you can expect to pay around $1000 for. You should also pay for product liability insurance: even if you don’t produce a product, you can still be held liable for selling it if somebody gets hurt or sick. The average cost of product liability insurance is around 26 cents per every $100 (retail cost) of goods.
Average Payout on Claims
Fire and flood losses cost organizations billions of dollars per year. Depending on the extent of the damage, a single incident could cost your business hundreds of thousands of dollars. It is crucial to ensure that you have an insurance policy that will cover the full extent of your property loss. A vehicle accident will average about $45,000 in damage, while the average theft claim is expected to cost about $8,000.
Occurrence of Claims
According to a study by KPMG, 59% of businesses have had a business interruption due to severe weather. With so much inventory being held in one place, it is easy to see how a single storm with high winds and rain can be devastating to a wholesaler. Depending on where your business is based, these incidents could be a lot more common and a lot more dangerous. Wholesalers are also very susceptible to theft due to the amount of product they hold, and it has been shown that 52% of theft is committed by employees. Finally, while a manufacturer may be more likely to be sued for product liability, it is more than possible that the victim could target your organization too; these types of claims are becoming more and more common in the courts today.
So, how do you compare? If you seem to be paying way more for your insurance than some, don’t panic: there are ways to improve! If you think you could be underinsured or overpaying for your insurance, contact your broker to see if there’s anything they can do.
If your occurrence or payout of claims is higher than your business can handle, maybe it’s time you start doing something about it! Risk management software can go a long way in analyzing your claim history, allowing preventative action and saving you thousands of dollars by avoiding claims. Take a look at ClearRisk’s product page to find out what benefits we can provide to your manufacturing business.