Warehouse Insurance Companies

Published 9/20/2022

When workers operate heavy machinery, lift heavy boxes, and handle valuable inventory, warehouses need to have the proper insurance in case an incident happens because expenses can add up quickly.

For those looking to learn more about warehouse insurance, what it covers, and how it works, below is our complete guide to warehouse insurance.

For those just to quickly protect their business, here are our top insurance options.

Pros

  • Competitive rates & discounts available
  • Online Quotes
  • Available in all 50 states

Cons

  • Scores slightly worse on customer satisfaction

Pros

  • Scores well on customer satisfaction
  • Wide range of coverage options
  • Available in all 50 states

Cons

  • Will need to work with an agent

Pros

  • Scores well on customer satisfaction
  • Wide range of coverage options
  • Available in all 50 states

Cons

  • Will need to work with an agent
By clicking “Get Quote” or calling you will go to our partner, Tivly.  They make it fast and easy for businesses to get matched to insurance providers who fit their specific needs.  The providers above may not be one of the providers in their network at this time.
About the author
Scott Elgin has been in the trucking business since 1982, acting as both a motor carrier and a freight agent at Elgin Trucking Co. During this time, he has overseen thousands of units servicing the entire continental United States.

What is warehouse insurance?

Warehouse insurance is a collection of commercial insurance policies that protect 3PLs, freight forwarders, and other businesses operating a warehouse, fulfillment center, distribution center, or similar facility.

Warehouse insurance is sometimes used interchangeably with a specific type of coverage, warehouse legal liability insurance. However, warehouse legal liability insurance will not provide sufficient coverage by itself and additional coverage will be required for any business running a warehouse facility.

What kinds of insurance does a warehouse need?

Like most businesses, warehouses require some of the common commercial coverages such as general liability, property insurance, and workers compensation. However, most warehouses will also require a warehouse-specific policy called warehouse legal liability insurance.

Common commercial insurance policies can include:

Warehouse Legal Liability

What is warehouse legal liability insurance?

Warehouse legal liability insurance, sometimes referred to as just warehouse liability, covers a third party’s property that is under the care of the warehouse.

Warehouse legal liability is a type of inland marine insurance.

What does warehouse legal liability cover?

Warehouse legal liability is designed to protect against the loss or damage to inventory owned by third parties.

Most policies will only cover negligence when handling or storing property and will not cover Acts of God or force majeure events.

Situations that warehouse legal liability will typically cover include:

  • Careless handling or storage
  • Negligent climate control
  • Insufficiently maintained facilities (such as a leaky roof, etc)
  • Mechanical breakdowns of refrigeration or temperature-controlled environments
  • Employee caused events (starting a fire from a lit cigarette, etc)
  • Lost or stolen inventory

What does warehouse legal liability not cover?

Warehouse legal liability does not typically cover events outside the control of the warehouse operators, such as Acts of God or force majeure events. These can include hurricanes, floods, tornadoes, earthquakes, employee dishonesty, and war or civil unrest.

How is inventory valued?

While this can vary based on the contract, inventory is typically valued at a fixed value per pound of inventory. For example, if the warehouse is liable for $0.75 per pound of inventory and 10 pounds of inventory is lost, the warehouse is only responsible for $7.50 in damages.

Most contracts value inventory between $0.15 and $3.00 per pound.

When this is insufficient for high-value inventory, “landed cost” policies are also available that reflect the manufacturing, transportation, and warehousing costs. These policies will have higher premiums since they provide additional coverage.

Additional Coverage Options

While most policies will only cover the cost of the lost or damaged inventory, many insurance providers will offer extended coverage that can include:

  • Legal Defense Costs
  • Employee Dishonesty
  • Earned Warehouse Charges

Warehouse Legal Liability vs General Liability Insurance

General liability covers bodily and property damage claims against a business. For example, if a third party slips at the warehouse, the medical bills and any legal expenses would be covered by a general liability policy.

Warehouse legal liability on the other hand covers property owned by a third party while it is in control of the business.

Since general liability insurance also covers third-party property, it may seem redundant to purchase a warehouse legal liability policy. However, since warehouses handle third-party property as a primary business function, general liability is insufficient and a separate policy is required.

Further Reading

For individuals looking for greater insight into how warehouse legal liability insurance works and what underwriters consider when creating a policy, the Inland Marine Underwriters Association’s Underwriting Overview can be a great resource.

What does warehouse insurance cost?

Because warehouse businesses can vary so widely depending on size, building features, and commodities handled, there is no published data on the average cost of warehouse insurance.

However, a warehouse insurance application can provide insight into the factors that will affect the cost of insurance. These factors can include:

  • Company Revenue
  • Number and size of the warehouse(s)
  • Location
  • Building Factors
  • Construction Type
  • Sprinkler Status
  • Alarms
  • Security Status
  • Fences/Gates
  • Watchmen
  • Commodities Stored and Handled
  • Number/Type of Employees

Finding Cheap Warehouse Insurance Coverage

While many companies are prone to select the cheapest monthly premium, it can end up costing companies more in the long run because the policy may come with more exclusions or a lower policy limit. 

However, there are several techniques companies can use to find the best rates:

  • Shopping around and receiving multiple quotes
  • Opting for a lower policy limit (though still carrying adequate coverage)
  • Opting for a higher deductible
  • Asking if the insurance provider offers discounts for premiums paid upfront on an annual basis

Who needs warehouse insurance?

A wide range of companies operating different types of warehouses and for various activities will all still require the proper insurance coverage.

These companies, activities, and warehouse types can include:


Companies
  • 3PLs
  • Freight Forwarders
  • Carriers with Carrier Facilities
  • Manufacturers
  • Wholesalers
  • Retailers
Activities
  • Storage
  • Distribution
  • Fulfillment
  • Cross-Docking
  • Transloading
Specialty

Best Warehouse Insurance Companies

Pros

  • Competitive rates & discounts available
  • Online Quotes
  • Available in all 50 states

Cons

  • Scores slightly worse on customer satisfaction

Pros

  • Scores well on customer satisfaction
  • Wide range of coverage options
  • Available in all 50 states

Cons

  • Will need to work with an agent

Pros

  • Scores well on customer satisfaction
  • Wide range of coverage options
  • Available in all 50 states

Cons

  • Will need to work with an agent
By clicking “Get Quote” or calling you will go to our partner, Tivly.  They make it fast and easy for businesses to get matched to insurance providers who fit their specific needs.  The providers above may not be one of the providers in their network at this time.
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