Wholesale, Distribution and Warehousing Insurance

Insurance for Businesses Whose Value Sits in Stock

Wholesalers, distributors, importers and warehouse operators share a problem that manufacturers and retailers do not have in the same form. The value of the business is concentrated in goods that are constantly in motion, frequently in someone else’s hands, and often worth considerably more at the point of sale than at the point of purchase.

Daines Kapp has been trading since 1989 and advises wholesale and distribution businesses across Hertfordshire and the South East. Our clients in this sector include packaging and polythene wholesalers, food and drink importers, electronic and electrical component distributors, plumbers’ and builders’ merchants, industrial bearings and transmission suppliers, plastics stockholders, and businesses that import, store, blend, bottle and redistribute finished products.

Getting Stock Sums Insured and Basis of Settlement Right

Two numbers decide whether a stock claim is settled properly, and they are not the same number.

The sum insured needs to reflect your peak, not your average. Most wholesale businesses have a seasonal cycle, and a sum insured set from the year-end balance sheet can be well short of what is standing in the warehouse in the busiest month. Where that gap exists, an underinsurance provision can reduce a claim payment proportionately even when the loss itself is well within the sum insured. Some policies do carry built-in provisions that increase the stock limit to allow for seasonal peaks, which helps, but the size of that allowance and whether it actually matches your trading pattern is something to assess carefully with your broker rather than assume.

The basis of settlement decides what each item is worth when it is destroyed. Stock is traditionally insured at cost price, which does not include the margin you would have earned, and does not include the cost of expediting replacement to keep a customer.

Where goods have been sold but not yet delivered, many policies include a contract price clause, which allows settlement on the contract price rather than cost. It is worth knowing that this clause exists in more than one form, and the version in your policy may only respond where the sale contract is cancelled as a result of the damage.

Warehousing, Racking and Storage Conditions

Once goods are stored in volume, the building and its management become part of the risk. Underwriters will look at construction, compartmentation and sprinkler protection, at how high stock is racked and how close it sits to the roof, at waste and packaging handling, at battery charging areas for forklifts and material handling equipment, and at how any hazardous or flammable goods are segregated.

Insurers often apply a range of policy conditions addressing how these risks are to be managed, and those conditions must be strictly adhered to in order for a claim to be paid. We would far rather establish that everything is being complied with at renewal than discover otherwise afterwards.

Where you store goods belonging to another party, or where your goods are stored by a third-party logistics provider, careful consideration is needed as to which party is responsible for insuring which goods and on what basis. That is typically stipulated by contract, and it is something we can assist with by means of a contractual review.

If you occupy the building as a tenant rather than owning it, the building itself will usually be insured by your landlord under a property owners’ policy. What you need to insure is your stock, your contents, any tenant’s improvements you have made, and your liability under the lease. It is worth checking what the lease actually requires of you, because that varies considerably.

Goods in Transit, Marine Cargo and Import Risk

Transit is where wholesale programmes most often have a genuine gap, because responsibility changes hands more than once and the insurance does not always follow.

Marine and air cargo covers goods on their international journey.

Your terms of trade decide when your exposure begins. The Incoterm agreed with your supplier fixes the point at which risk passes from seller to buyer, and that point moves a very long way depending on which term you use. On Ex Works you are at risk from the moment the goods leave the seller’s premises. On Delivered Duty Paid you are barely at risk until they reach you. Only two of the eleven Incoterms, CIF and CIP, place a contractual obligation on either party to buy insurance at all, and even then to a specified minimum rather than to whatever your business actually needs. Under every other term, nobody is obliged to insure the goods, so if the risk is yours and you have not arranged cover, the goods are simply uninsured.

Cargo cover also ends sooner at the far end than most people expect. That is a separate question from where your risk begins. Under the standard Institute Cargo Clauses, cover terminates on delivery into the final warehouse or place of storage, or on the expiry of 60 days after discharge from the vessel, or 30 days after unloading from an aircraft, whichever happens first. In practice, for a wholesaler taking goods into their own warehouse, the cargo policy stops on arrival. The storage that follows has to be covered somewhere else.

Stock throughput is the answer to that for a number of our clients. It is a single marine-based policy that follows the goods through the international journey, inland transit, storage at your own or a third party’s premises, and onward distribution, rather than stitching a cargo policy to a property policy and hoping the two meet cleanly at the warehouse door. For businesses with a continuous flow of goods, multiple sites or third-party warehousing, it removes the handover gaps and puts the whole journey with one underwriter on one set of terms.

Goods in transit covers goods being moved domestically, whether on your own vehicles or by a carrier you engage. If you deliver on your own vehicles, this interacts with your motor fleet arrangements.

Do not rely on your haulier’s insurance. This is the most common and most expensive assumption in the sector. A carrier’s liability to you is capped by their trading conditions, and the cap is calculated by weight, not by what the goods are worth. At August 2026, under the Road Haulage Association’s Conditions of Carriage 2024 the limit is £1,300 per tonne of the goods lost or damaged. A freight forwarder trading on BIFA Standard Trading Conditions 2021 is limited to 2 Special Drawing Rights per kilo, and international carriage by road under CMR is limited to 8.33 units of account per kilogram. These figures come from the editions current at the date shown and are worth re-checking. For a pallet of electronics, pharmaceuticals, cosmetics or spirits, those figures are nowhere near the value of the load. Higher limits can sometimes be agreed with the carrier in advance for a surcharge, but the reliable answer is to insure the goods yourself.

Product Liability When You Did Not Make the Product

A wholesaler’s instinct is that product liability belongs to the manufacturer. Often it does. But UK product liability law can treat a business as the producer of goods it did not manufacture, and two situations in particular bring that about: importing goods into the United Kingdom from outside it, and supplying goods under your own brand or own label.

In either case a claimant injured by the product may pursue you, and your recourse against an overseas manufacturer may be slow, expensive or practically worthless. This is not a theoretical point for an importer, and it is why we look at your product liability section against what you actually import and how you actually label it, rather than against what you make.

Your rights of recourse against your suppliers matter here too, and they can be signed away without anyone noticing. Insurers require that rights of subrogation are preserved, so that where they pay a claim they can pursue whoever was actually responsible. A supply agreement containing a waiver of subrogation, or a broad limitation of the supplier’s liability, can cut across that and prejudice your own cover. This is another area where a review of the contracts you are trading under is worthwhile, so that your contractual position and your insurance position are aligned rather than working against each other.

Cyber Risk and the Order Book

For a wholesaler, the practical consequence of a cyber incident is usually not a data breach. It is an inability to take orders, pick stock, dispatch and invoice.

There is also a specific fraud exposure in this sector, and we have seen it. Wholesalers are targeted with fraudulent orders: goods are ordered on account, delivered in good faith, and never paid for, and the customer turns out not to exist. False identities and false delivery addresses are used to route the consignment somewhere the goods can be collected and disappear. Cover is available in the market for exposures of this kind, and it is an area we can advise on.

Businesses that pay overseas suppliers by transfer, and that handle payment instructions by email, face the mirror image of the same problem in invoice redirection and impersonation fraud. Whether your cyber or crime cover responds depends closely on the wording, and on how the payment was authorised.

Daines Kapp is a BIBA Accredited Cyber Insurance Broker, and our cyber and AI advice is led in-house by Stefan Daines, a recognised speaker on AI and insurance risks. Where businesses are beginning to use AI in demand forecasting, pricing or customer service, our AI insurance page explains why the wording of the policy matters more than the label on it.

Where Wholesale and Warehousing Risk Sits in Your Programme

Who We Help

• Wholesalers and trade suppliers: including packaging, polythene, PPE, catering, plumbing and builders’ merchant businesses supplying trade customers on account.
• Importers and own-brand suppliers: where sourcing from overseas brings product liability with it, and where transit and currency both affect stock values.
• Distributors of technical components: electronic, electrical, electro-mechanical, bearings, transmissions and industrial supplies, where traceability is part of the product.
• Stockholders and specialist storage: businesses holding high volumes of a single material category, from plastics and acrylics to food and drink.
• Warehouse and fulfilment operators: including businesses storing, picking and shipping goods that belong to their customers.
• Businesses that blend, pack or finish before shipping: where the line between distribution and light manufacturing has quietly moved.

Why Choose Daines Kapp for Wholesale and Warehousing Insurance

We are an independent broker based in Ware, Hertfordshire, and Daines Kapp has been trading since 1989. We were a finalist at both the British Insurance Awards and the UK Broker Awards in 2026.

We place business directly with a range of insurers and have access to the wider specialist market as a Willis Network Broker. For this sector that access matters at the edges: transit limits, storage conditions, throughput arrangements and the treatment of own-brand product liability are all negotiable in a way that headline premium is not.

What we do differently is follow the goods. We look at where your stock physically is across a normal trading year, who is responsible for it at each point, what the contracts say, and which policy is answering at each handover. That is where wholesale programmes are strong or weak, and it is not visible from a schedule.

Frequently Asked Questions About Wholesale and Warehousing Insurance

What insurance does a wholesale or distribution business need?

The core is cover for the premises and handling equipment, which means the building if you own it or tenant’s improvements and your lease obligations if you rent, together with stock cover set at a realistic peak value, employers’ liability where you have staff, public and product liability, and business interruption for the profit lost while you cannot trade. Beyond that, most wholesalers need goods in transit cover for domestic movements and marine or air cargo cover for anything imported, and some are better served by a single stock throughput policy covering transit and storage together. Businesses that store goods belonging to customers, or that use third-party logistics providers, need the contractual position checked as well, because the contract usually decides who insures what.

Should stock be insured at cost price or selling price?

Cost price, in almost every case. The purpose of the policy is to indemnify you for what the goods cost you, not to pay you the profit you expected to make on them. That profit is not ignored: it is picked up by the business interruption section, which is designed to replace the earnings you lose while you are unable to trade normally. Insuring stock at selling price is not the norm and would not usually be agreed without a specific conversation with the insurer. There is one well-established exception. Where goods have already been sold but not yet delivered, the margin has effectively been earned, and many policies include a contract price clause allowing settlement on the contract price for those goods. That clause exists in more than one form and the version in your policy may only apply where the sale contract is cancelled because of the damage.

Am I liable for a faulty product if I only imported or distributed it?

You may well be. UK product liability law can treat a business as the producer of goods it did not manufacture, and the two situations that most often bring that about are importing goods into the United Kingdom and supplying goods under your own brand or own label. In either case an injured claimant can pursue you directly, and recovering from an overseas manufacturer afterwards may prove slow or impossible. It is also worth reviewing your supply contracts, because a waiver of subrogation or a broad limitation of your supplier’s liability can remove the recourse your insurer would otherwise rely on. If you import, or if you put your name on goods made by someone else, your product liability cover needs to be arranged on the basis that the exposure is yours.

Does my insurance cover stock while it is with a third-party warehouse or courier?

Not automatically, and this is one of the most common gaps we find. Your premises cover applies to your premises. Once goods are with a third-party logistics provider, in a consolidation hub, or overnight on a carrier’s vehicle, cover depends on whether your transit and storage sections were drafted to include those situations, and on what your contract with that third party says. A carrier’s liability to you is limited by their conditions of carriage and calculated by weight, which is commonly a fraction of the value of a full load; at August 2026 the Road Haulage Association figure is £1,300 per tonne. We check both the wording and the contract, and where goods spend significant time in third-party storage we will look at whether a stock throughput arrangement suits you better.

What do underwriters ask about a warehouse?

Expect questions about the construction of the building, whether it is sprinklered, how high stock is racked and how close it comes to the roof, how packaging and waste are handled and stored, where forklift batteries are charged, how any flammable or hazardous goods are segregated, and what security and alarm arrangements are in place. They will also ask about the maximum value of stock in the building at any one time. Underwriters are not looking for perfection; they are looking for a business that knows its own operation. Presenting that picture clearly tends to improve both terms and pricing, and we help clients prepare it before approaching the market.