Here's something most people don't realize about the wholesale and distribution business: you're sitting right in the middle of a liability chain. When a product moves from manufacturer to retailer to consumer, everyone in that chain can get sued if something goes wrong. Your warehouse worker slips while moving pallets? That's a claim. A forklift damages a client's delivery truck? That's a claim. A defective product you distributed causes an injury? You guessed it—that's a claim too.
General liability insurance is what stands between your distribution business and financial catastrophe when these incidents happen. And trust us, they will happen. Statistics show that between 36% and 53% of businesses face lawsuits each year, and four out of ten small businesses will experience a property or general liability claim in the next decade. For wholesale and distribution operations—with their heavy machinery, constant foot traffic, and product handling—those odds are even higher.
Why Wholesale and Distribution Businesses Need General Liability
Your distribution facility is a high-activity environment. Clients visit your warehouse. Delivery drivers navigate your loading docks. Salespeople tour prospects through your operations. Each person who steps onto your property represents potential liability exposure. The average slip-and-fall claim costs about $20,000, and customer injury claims average $30,000. Without general liability coverage, those costs come straight out of your business bank account.
But premises liability is just the beginning. As a distributor, you're also exposed to product liability risks. Even if you didn't manufacture the products you distribute, you can still be named in lawsuits if those products cause harm. Product liability claims average $35,000, but they can reach much higher—juries awarded an average of over $7 million in personal injury cases in 2020. If you import products directly or do any repackaging, your exposure increases significantly.
Beyond legal protection, general liability insurance has become a business requirement. Retail partners, online marketplaces like Amazon, and commercial clients routinely require certificates of insurance before they'll do business with you. No certificate, no contract. It's that simple. Your competitors who carry proper coverage will get the business while you're left explaining why you don't have insurance.
What General Liability Insurance Covers for Distributors
General liability insurance for wholesale and distribution businesses covers four main areas. First, bodily injury to third parties—if a delivery driver trips over equipment in your warehouse and breaks an ankle, your policy covers their medical expenses and any resulting lawsuit. Second, property damage to others—when your forklift accidentally damages a client's vehicle or your employee breaks a customer's merchandise during handling, you're covered.
Third, product liability—this protects you if products you distribute cause injury or property damage. If a defective item you sold injures someone, your general liability policy typically covers legal defense costs and settlements. Fourth, advertising injury—if a competitor claims your advertising infringes on their trademark or copyright, your policy provides coverage.
Importantly, general liability covers not just settlements and judgments but also legal defense costs. Even if a lawsuit against you is completely baseless, defending yourself in court costs serious money. Your GL policy pays for attorneys, court costs, and expert witnesses—expenses that can easily reach six figures.
Understanding Coverage Limits: Per Occurrence and Aggregate
General liability policies have two critical numbers you need to understand. The per occurrence limit is the maximum your insurance will pay for any single incident. The aggregate limit is the total maximum your policy will pay for all claims during the policy period, typically one year.
For wholesale and distribution businesses, the industry standard is $1 million per occurrence and $2 million aggregate. In fact, 83% of wholesalers choose this limit structure, and it's what most commercial contracts require as a minimum. Some policies also include a separate products and completed operations aggregate, which caps the total payout for product liability claims specifically.
Here's why these limits matter. Imagine you distribute a batch of defective electronics that cause fires in multiple homes. Each fire is a separate occurrence, potentially maxing out your per occurrence limit. But if you have five such claims in one year, you could hit your aggregate limit—at which point your policy stops paying and you're personally on the hook for any additional claims.
If your business handles high-risk products, imports goods directly, or has substantial revenue, you may need higher limits. Coverage can range from $300,000 up to $1 million per occurrence through standard policies, and you can purchase umbrella or excess liability policies for limits beyond $1 million. These umbrella policies provide an additional layer of protection that sits on top of your general liability coverage.
How Much Does General Liability Cost for Distributors?
Wholesale and distribution businesses typically pay between $700 and $2,500 annually for general liability insurance—that's about $58 to $208 per month. Your actual cost depends on several factors: your annual revenue, the types of products you distribute, your claims history, the size of your facility, and whether you do any importing or repackaging.
Products matter significantly. Distributing children's toys or medical devices will cost more than distributing office supplies because the liability exposure is higher. Importing goods directly or repackaging products under your own label also increases your premium because you're taking on manufacturer-level risk. Companies with spotless safety records and no claims history get better rates than those with frequent incidents.
The good news? Market conditions in 2025-2026 favor buyers. Commercial insurance rates have moderated after years of increases, with ample capacity available for standard risks. If you maintain strong risk management practices—like regular safety training, proper equipment maintenance, and documented quality control procedures—you'll qualify for better pricing.
What General Liability Doesn't Cover
General liability insurance is essential, but it's not comprehensive. Understanding what it doesn't cover helps you identify other policies you need. GL doesn't cover your employees' injuries—that's what workers' compensation insurance handles. Given that distribution work involves forklifts, heavy lifting, and warehouse hazards, workers' comp is mandatory in most states and critical for protecting your team.
General liability also doesn't cover vehicles. If your distribution business operates delivery trucks, you need commercial auto insurance. It doesn't cover goods in transit either—for that, you need inland marine coverage, which protects inventory while it's being transported. And it doesn't cover your building, equipment, or inventory if they're damaged by fire, theft, or natural disasters—commercial property insurance handles those risks.
Professional mistakes like incorrect shipping information or order fulfillment errors typically aren't covered by general liability. For comprehensive protection, many distributors bundle general liability with property coverage in a Business Owner's Policy (BOP), then add workers' comp, commercial auto, and inland marine coverage as needed.
How to Get Started with General Liability Insurance
Getting general liability coverage for your wholesale or distribution business starts with gathering basic information. You'll need details about your annual revenue, the types of products you distribute, the size of your facility, number of employees, and any importing or repackaging activities. Have your business structure information ready—whether you're an LLC, corporation, or other entity.
Work with an insurance agent or broker who understands the distribution industry. They can help you determine appropriate coverage limits based on your contractual requirements and risk exposure. Don't just grab the cheapest policy—review what's actually covered, what the exclusions are, and how the claims process works. Ask about discounts for safety programs, security systems, or bundling multiple policies.
Once you have coverage, request certificates of insurance to keep on hand for client requests. Most insurers can issue these quickly, often within 24 hours. Review your policy annually—as your business grows, your coverage needs will change. Adding new product lines, expanding your facility, or increasing revenue should trigger a policy review to ensure you're still adequately protected.
The wholesale and distribution business is all about moving products efficiently from point A to point B. General liability insurance ensures that when something goes wrong in that process—and something eventually will—your business survives the financial impact. It's not just protection; it's the price of admission to work with major retailers and online marketplaces. Get covered, stay covered, and focus on what you do best: keeping products moving.
