Archive for Dealers & Distributors
Anhydrous Ammonia Dealers
Both the property and the liability exposures of anhydrous ammonia dealers are significant due to the potential for explosion. The primary legal use of anhydrous ammonia is to fertilize crops. Unfortunately, it also has several illegal uses, such as making explosives, methamphetamines, and freebase cocaine.
A number of package policies for franchised automobile dealers have been developed and are readily available. They usually provide property, auto dealers’ premises and operations liability, garagekeepers insurance, and dealers’ physical damage coverages. Loss of business income, employee tools, personal and advertising injury liability, and other optional coverages are also available.
Bicycle dealers require coverage for their property and liability exposures. Major property coverages needed include direct damage, theft, business income, and extra expense. Transit and automobile coverages are important if the dealer delivers. Other liability exposures may include bicycle rental, service, and repair. Products coverage similar to that provided to a manufacturer may be required if the dealer imports bicycles directly from foreign manufacturers.
Biofuel distributors provide biofuel blended to the specification of its customer base. They are similar to other fuel distributors with the same fire and explosion concerns. Most biofuels are distributed through rail or motor carrier and not through pipelines which is a major exposure.
Boat dealers sell new and used watercraft. The dealers may be land or water based. Policies designed for boat dealers cover stocks of boats, accessories, and supplies held for sale. Property and marine coverage is usually written on an “all risks” type basis. Coverages are similar to open lot automobile coverage and garagekeepers legal liability.
Chemical distributors require significant liability insurance limits in order to protect them from environmental impairment lawsuits related to the potential release of chemicals that they store and distribute to others. They have a significant workers compensation exposure because of the toxic properties of many of the chemicals plus the catastrophic explosive exposure of certain chemicals. Property and business income exposures are also challenging. The auto exposure has standard motor carrier concerns with the added environmental impairment exposure resulting from overturn or collision.
Coin and Stamp Dealers Insurance
Coin and stamp dealers are not eligible for coverage under individual coin and stamp collections floaters. Markets are available to insure property that consists of stocks of stamps or coins, including property of others on approval or consignment, on specified premises, while in transit, or at trade shows and exhibitions. All risk type perils or special causes of loss apply with very limited exclusions. Coverage can be tailored to fit the needs of individual dealers. A significant underwriting problem is valuing inventory because of sharp or frequent fluctuations in market prices. This coverage is underwritten on an individual risk basis by:
Cosmetics distributors may supply beauty products through standard retail operations or may develop retail partnerships whereby the retailer sells the product through parties or in other methods to distribute the product. The more engaged the distributor is in the process of developing, recruiting, and rewarding the retailer, the more exposures the distributor has. All distributors have significant property exposure because stock is stored on premises. Lacquer nail polish is a particular concern because of its low ignition point. Cosmetics are highly susceptible to loss and will have little salvage value. Workers compensation will vary based on the types of activities in which the distributor is involved. Transportation issues are significant because the goods being transported will have little salvage value following collision or overturn.
Durable Medical Equipment Distributing
Durable Medical Equipment (DME) is equipment to aid a medical condition that patients can use multiple times. Examples are wheelchairs, walkers, oxygen equipment, canes, patient lifts, and CPACs. Defects in the equipment can worsen the condition of the patient so coverage for certain types of equipment can be difficult to place. Distributors of foreign manufactured equipment may be considered the manufacturer if U.S. based insurance is unavailable.D710
Equipment and Tool Rental Services
Equipment and tool rental risks are difficult to place, especially if coverage is needed for equipment that is rented out. Coverage for tools and equipment rented to persons who may not know how to operate them properly is also needed because the items rented may be damaged or broken. The liability exposure is also significant, especially if the rental service rents out chainsaws and other power tools that can cause serious injury.
Equipment Leasing: Lessor Protection
When equipment is leased to others, those lessees are required to insure it. The equipment owner can purchase contingent coverage that pays for its interest in the equipment if the lessee does not meet its contractual obligation to insure the equipment. This coverage can be broadened to include the lessee’s interest.
Firearms Dealers and Distributors
Comprehensive insurance programs are available for firearms wholesalers, distributors, retailers, gunsmiths, ammunition manufacturers, and indoor and outdoor shooting ranges. They are treated as specialty business because of the hazards that firearms and live ammunition present. Commercial general liability, products liability, and broad form vendors’ coverages are important because many state and federal regulations require them. Property coverage on firearms and ammunition may also be available. Deductibles usually apply to premises hazards.
Flea Markets and Antique Shows
Individuals who sell items at flea markets, antique markets, and similar venues have property and liability exposures. They need coverage to protect their property and stock while it is in transit as well as while it is at the market. They need liability coverage for their actions and also to satisfy the market’s requirement that the vendor provide a certificate of insurance as evidence of its general liability coverage.
Liquefied Petroleum Gas Dealers
Liability insurance on propane and bulk oil dealers requires specialty underwriting. These businesses need insurance coverage at their storage locations as well as off-premises where the fuel is delivered. There is a significant exposure to catastrophic loss and inspecting the facilities is usually a part of the underwriting process.
Liquor Dealers and Stores
Because of the tremendous exposure to burglary losses of stock and the need to maintain an adequate inventory of whiskeys, wines, and liquor, liquor dealers and stores are target risks for burglars and other criminals. Some insurers offer needed coverages piecemeal, on a stand-alone basis. Others combine all the necessary coverages, including liquor liability, in a package policy. These package policies include high liability limits for both commercial general liability and liquor liability. Careful consideration must be given to the firmâ€™s ownership, peak concentration of values at certain times of the year, the firm’s business reputation, and adequate lighting and police surveillance when the store is not open for business.
Marijuana Retail Dispensaries
Dispensaries are retail outlets that sell medical and/or recreational cannabis direct to consumers. Dispensary technically means a facility that prepares and makes medicines available. With more States authorizing adult recreational use and new medicinal use opportunities developing in multiple States, cannabis sales are projected to grow substantially in the next few years. Therefore, thereâ€™s a concern with the rapid addition of start-ups. Similar to Medical marijuana dispensaries, the product exposure is problematic due to a lack of Food and Drug Administration guidelines. Employee dishonesty and fire concerns are high. Theft exposures is a particular with prevalence of cash sales. Other product and professional exposures are significant as customers rely on employee guidance on product use. Recall exposure is also a concern.
Note: descriptions may use marijuana, cannabis, or hemp interchangeably.
Marijuana Wholesale Distributors/Transporters/Secure Transportation
Wholesale Distributors and Transporters are businesses that purchase or contract quantities of cannabis from other licensed facilities and sell and transport products to licensed retailers, processors, and/or to other wholesalers. Product is stored in secure warehouses between transportation points or while pending sale. Wholesale distributors can also solely operate as secure warehousing and secure transporters.
The workers compensation exposure can be high and require extensive and ongoing loss prevention effort. Employee dishonesty and theft are concerns as well as higher auto and cargo exposures. Liability for loss or damage to (or destruction of) property of others is a significant exposure. Values can be significant.
Note: descriptions may use marijuana, cannabis, or hemp interchangeably.
Medical Device Distributing
Many companies distribute multiple types of medical devices. The devices can consist of simple disposable items or may be delicate items that are implanted inside the patient. Distributors of some of the more complicated devices may actually enter the operating room to assist in sizing the most appropriate device.
Medical Marijuana Dispensaries
A number of states have approved the use of physician prescribed medical marijuana. These dispensaries attempt to fill those prescriptions. They have exposures similar to pharmacies or liquor stores because the commodity they sell is both very attractive and controlled by a government authority. The product exposure is more difficult because there are no Food and Drug Administration (FDA) guidelines that address the drug. Employee dishonesty and theft exposures are significant because all sales must be conducted with cash. Products, particularly from edibles, and/or professional exposures are also concerns.
Mobile Home Dealers – Physical Damage and Liability
Mobile home dealers are similar to auto dealerships because they need coverage on their stock of unsold mobile homes on their lots. An open lot dealers physical damage coverage form or policy can be used to provide such coverage. These forms can also be used to cover mobile homes, travel trailers, and other types of recreational vehicles the dealership sells. In addition, they can cover such stock on premises, while in transit, and while being installed at the purchaser’s location. Coverage is usually written on a reporting basis, where the dealer reports the values of its inventory monthly, including a provisional deposit premium and adjustment at the end of the policy period.
Insurance on motorcycle dealers is usually written on modified auto dealers liability forms specifically adapted to motorcycle dealers. One coverage includes premises liability for sales operations in connection with service and repair of customers’ motorcycles and motor scooters. Another covers motorcycles of customers while in the dealer’s shop for repair, similar to garagekeepers legal liability coverage. A dealers supplemental physical damage policy covers the dealerâ€™s interest in its stock of unsold motorcycles. It covers the stock of motorcycles for certain named perils, such as fire, theft, collision, vandalism, riot, etc. Coverage may be written on a reporting form basis to cover the monthly fluctuations in values of stock. The following insurers write insurance on motorcycle dealers.
Nanomaterials are used in a variety of manufacturing operations. Distributors provide these materials based on needs of customers. These distributors have very specialized knowledge of the materials. The shipping and handling are important due to potential environmental contamination. Nanomaterial manufacturing is a worldwide industry so importing and exporting risks may be significant.
Oil Jobbers/Petroleum Distributors
Petroleum distributors face many risks. The primary concern related to property is damage to their equipment by fire and explosion. Large distributors and even oil and gasoline service stations face the difficult liability exposure of pollution from underground oil or gasoline storage tanks. A number of insurers write a full package of coverages for oil jobbers and distributors, including commercial general liability, commercial auto, property, and workers compensation. Coverage is available for retail service stations, wholesale operations, bulk stations, and products being transported in tankers to and from bulk oil and LPG stations to retailers.
Precious Metal Dealers
Property coverage on this class of business is usually written on an “all risks” basis using a coverage form and approach similar to the jewelers block policy. The theft exposures are similar to the theft exposures of jewelry stores and pawnshops. Smelters, refiners, and warehouses can also be covered. Transit coverage from outside locations to the store is available as is coverage to and from bank vaults where expensive gold and silver jewelry and accessories are kept.
Recreational Vehicle Dealers
Recreational vehicle dealers need liability and physical damage insurance coverage. These coverages may be offered separately or on a combined basis, depending on the insurer. Snowmobiles, campers, motor homes, mopeds, trail bikes, and all-terrain vehicles are some of the more popular vehicles. Liability insurance covers all sales operations and demonstrations and may extend to include completed repair and service operations and premises. Floor plan coverage for damage to the dealer’s stock of recreational vehicles may be available. Coverage for customers’ vehicles can also be provided while those vehicles are on the dealer’s premises for service or repairs. Optional rental and racing sponsorship liability coverages can be arranged in some markets.
These operations can be very large and generic or small and customized. All are labor intensive and involve significant workers compensation exposures from cuts, carpel tunnel, and disease. The slaughterhouse may own the meat it produces or others may own the meat and the slaughterhouse only processes it. Housekeeping, sanitation, and regularly testing the meat are primary underwriting considerations.
Tire retreading presents a significant products liability exposure, making this a difficult class of business to place. Several programs available for tire dealers and retreading operations provide property, crime, loss of business income, and commercial general liability coverages. Monoline unsupported products liability coverage is also available.
Used Car Dealers Insurance
Used car dealers are a difficult class to underwrite and place because of a number of problem exposures. Examples are the difficulty in establishing the proper valuation of used vehicle stock due to value fluctuation and products-completed operations concerns when the dealership provides repair and maintenance services. Theft, hail, and vandalism are concerns in certain areas because the vehicles are typically kept in open lots. Dealers that provide their own financing have additional insurance needs.
Welding Supplies Sales and Distribution
Welding supplies consist of multiple types of equipment. However, the most volatile aspect of the business is the gas supplied to the welder. The storage of the gases on premises adds to the fire and explosion potential and the supply of the gases to the welder adds to the product exposure.