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What is warehouse and storage insurance?

Warehouse and storage insurance is a collection of coverages designed to protect your company from the unique risks associated with storing goods. Whether you own the storage space or rely on a third party, this insurance is essential for safeguarding your assets against financial loss from events like theft, fire, property damage and liability claims.

What warehouse and storage insurance includes

Your policy can be customized to your specific needs, but most standard warehouse and storage insurance plans include these coverages:

• Commercial general liability (CGL): General liability coverage is the foundation of your policy. It protects your business against claims of bodily injury or property damage to third parties (like clients or visitors) that may occur on your premises.
• Commercial property: Commercial property insurance protects your physical assets, including the warehouse building itself (if you own it) and its contents – such as shelving, equipment, and office furniture – from risks like fire, theft and natural disasters. This also covers your inventory.

Recommended add-ons for warehouse and storage insurance coverage

Add-ons provide tailored protection for unique risks your warehouse may face. To ensure complete protection, consider these are some valuable additions to your policy:

• Product liability: Product liability coverage protects you in the event of third-party injuries or property damage caused by the products stored at your warehouse that you manufacture, distribute or sell. It’s usually included as part of your general liability coverage.
• Tenant legal liability: Tenant legal liability is meant for repairing or replacing any property that you’re renting or occupying.
• Business interruption: If a covered event forces you to temporarily shut down your warehouse or storage space, business interruption insurance helps replace lost income and cover ongoing expenses like rent and payroll, allowing you to recover without financial strain.
• Cyber liability: Protects your business from financial losses resulting from data breaches and other cybercrimes, which is crucial if you store sensitive customer information for your warehouse.
• Equipment breakdown: Covers the cost of repairing or replacing essential equipment (like forklifts or conveyor systems) at your warehouse if it suddenly fails.

Common types of warehouse and storage insurance claims

Even with the best safety protocols, accidents can happen. Some of the most frequent claims for warehouses include:

• Theft: Someone breaks into your warehouse and steals a significant portion of your inventory, which costs you over $10,000 to replace. Fortunately, you have insurance, and your commercial property coverage reimburses you for your loss.
• Loss of income: Fire breaks out at your warehouse, destroying a good portion of your inventory, equipment and building, making it inoperable until repairs are completed, costing you thousands in lost income., which costs you thousands of dollars in lost income. Your business interruption coverage pays back your income, ensuring your business keeps on going.
• Data breach: A cyberattack steals your customers’ data, exposing to fraud and other risks. Thanks to cyber liability coverage, you’re able to afford the cost of notifying your customers, restoring your systems and enlisting services like crisis management and credit monitoring.

How much does warehouse and storage insurance cost?

The cost of warehouse or storage insurance can vary significantly from one kind of space to another. That said, you should expect to pay $2,000 per year at minimum for basic coverage like general liability and commercial property.

Some of the factors to impact your premiums include:

• Type of coverage: More coverage means higher costs. If in addition to general liability and commercial property, you purchased cyber liability and equipment breakdown coverages, you’ll likely pay more.
• Coverage amount: Higher coverage limits result in higher premiums. For instance, you can opt of for a $2-million limit for your general liability coverage or you can go higher.
• Location: Warehouses in areas prone to natural disasters (e.g., floods, earthquakes, hurricanes) or high crime rates may lead to increased premiums due to the risk of damage or theft. Warehouses in remote areas far from fire stations or hydrants are also at a higher risk, which can result in higher premiums.
• Type of goods stored: High-value items (e.g., electronics, jewelry) increase the risk for insurers, leading to higher premiums, goods that are perishable or require special conditions (e.g., refrigeration) as well as flammable, toxic or otherwise hazardous materials can all significantly raise your premiums.
• Building construction and age: Older buildings with outdated safety features typically cost more. Depending on the materials used in your building’s construction, your premium could wind up either higher or lower. Finally, the age of your roof also plays a role. Roofs that over 10 years old often lead to higher premiums as they increase the likelihood of leaks and water damage.
• Square footage: Larger warehouses may have higher premiums due to the increased value of contents and potential for larger losses.
• Claims history: A history of frequent or large claims can signal higher risk to insurers, leading to increased premiums.

How to get the cheapest warehouse and storage insurance rates

Finding affordable coverage for your warehouse needs doesn't mean you have to sacrifice protection. Follow these tips to secure the best possible rates:

• Bundle policies: Combine multiple insurance policies (like property and liability) with one provider to receive a discount.
• Increase your deductible: Choosing a higher deductible can lower your monthly premium, but make sure it's an amount you can comfortably afford to pay out of pocket.
• Maintain a good record: A claims-free record demonstrates lower risk to insurers, which can lead to better rates.
• Implement a risk management plan: Show insurers you're serious about safety by installing security systems (such as cameras and fire alarm systems), conducting regular staff training and maintaining your facility.