Significance Of Insurance In Warehousing Industry

Warehouse refers to a facility used by the businesses for short-term or long-term storage of consumer goods. In return, the businesses pay a certain amount of agreed rent to the warehouse owners. Storage of goods, picking of goods & packing of goods, all fall under the purview of warehouse activities.

Although the notion of a warehouse seems to be pretty simple, the warehouse owners have to consider a lot of parameters that might put their business at risk or might cause some serious damage to it. Even with proper planning, certain things can still go wrong while performing any business operations. Hence, at such times, having the right warehouse insurance in place goes a long way in protecting the business by reducing the intensity of the damage or the losses incurred.  

With this article, Edgistify aims to shed some light on the types of insurance in the warehousing industry & their significance.

What is Warehouse Insurance?

For a warehouse owner, the warehouse premises & the goods stored within the warehouse form his or her business. Hence, protecting them at any cost is the most important goal of any warehouse owner. Simply put, warehouse insurance refers to a set of coverages designed to protect the warehouse owner from any liability & property claims. However, there are varied types of warehouse insurance. A warehouse owner must select the insurance basis, the warehouse structure, the type of items stored within the warehouse & the way in which the stored items are handled within the warehouse.

Is Warehouse Insurance Essential?

No matter the type of business, it is always a good idea to have insurance in place. If there is damage to the property, if a visitor to the warehouse space gets injured or if any other events occur, the warehouse owner is held liable. Similarly, if any of the company workers get injured while performing any warehouse operation, the warehouse owner is liable to give financial support to the concerned person. Hence, all these incidents make warehouse insurance essential.

Types of Warehouse Insurance

As mentioned earlier, warehouse insurance must be chosen based on the type of contents stored within the warehouse, the size of the business operation & the type of the warehouse structure. Below mentioned are some of the types of insurances in the warehousing industry.

1.   Commercial Property Insurance

This insurance helps cover losses related to natural disasters including fires, theft & damage due to change in temperature or humidity. The tangible assets of the warehouse which can be covered under this insurance are mentioned below:

• Refrigeration units
• Freezers
• Storage racks
• Office equipment
• Software
• Data

Businesses might have to bear a huge amount of expenses if these assets are damaged in any way. Hence, commercial property insurance helps businesses continue their services by protecting their warehouses from such damages.  

2.   General Liability Insurance

Even though this insurance doesn’t provide 100% coverage from all the potential risk factors, it is a must-have for a warehouse owner. This insurance provides protection against varied types of losses. Some of them have been listed below:

• Copyright violations
• Costs incurred for defending lawsuits
• Third-party bodily injury

 3.   Warehouse Legal Liability Insurance

Clients or the customers pay an agreed fee amount for storing products in the warehouse. Hence, it is the responsibility of the warehouse owner to ensure the safety of the warehouse contents & can be held liable for any damage to the stored contents. Following are some of the issues that can give rise to liability claims:

• Fire/flood
• Infestation
• Inadequate maintenance
• Missing items

 Hence, this coverage basically focuses on losses due to negligence. Having legal liability coverage for warehouses helps owners in protecting the products stored within their warehouses hence limiting their financial losses.

4.   Commercial Auto Insurance

If a business is making use of a fleet of vehicles, be it for transportation of finished goods or for procuring raw materials from multiple sources, then commercial auto insurance is a must. This insurance helps businesses cover any financial losses that they have incurred due to vehicles used in business operations. Below mentioned are some of the vehicles covered under this insurance:

• Cargo vans
• Pickup trucks
• Refrigerator trucks
• Food trucks
• Dump trucks

 5.   Worker’s Compensation

Employees are the heart of any business. Hence, ensuring their safety goes a long way in the proper functioning of the business operations. There is a possibility of the employees getting injured while performing warehouse operations or due to exposure to hazardous conditions. With worker’s compensation in place, any injury caused to the employees while performing business operations can get covered. Mentioned below are some of the accidents or conditions covered under this insurance:

• Disability caused due to injury at the workplace
• Repetitive stress injuries
• Illness associated with exposure at the workplace
• Death benefits to the family

6.   Employee Dishonesty Coverage

This insurance is meant to protect businesses from the damage that they might incur due to criminal or dishonest acts of their employees. It offers coverage for the following:

• Money securities
• Loss of business property
• Fraud
• Unauthorized transfer of funds

Hence, this insurance policy basically covers the business owner along with the other people mentioned in the insurance coverage policy.

7.   Cyber Liability Insurance

This insurance helps in covering the financial losses that the business might incur in case of any cyber attack or data breach & any legal claims are made against the business. Hence, it helps in covering data or technology that is normally not covered under general business liability coverage. To get this policy issued, businesses need to have certain safeguards like firewall protection or antivirus in place. Mentioned below are some of the costs that are covered under cyber liability insurance:

• Loss of electronic data
• Loss of business income due to data breach
• Security fixes
• Credit monitoring services

 Looking for a warehousing solution with proper compliance & legality in check for your business? Then Edgistify is your one-stop destination. We offer a one-of-a-kind procurement support platform enabling our clients to fulfill their end-to-end logistics needs. Our holistic services also include fire & safety compliance along with proper legality checks. Visit Edgistify today, to know more about us!