There are several aspects of Commercial Insurance and Risk Management to be aware of whether you are a distributor of products or a dealership providing pallet jacks, lifts, etc. to warehouses.
The Material Handling distributors have several exposures including what is referred to as Products and Completed Operations. For example, by selling a racking or shelving system you have established an implied warrant that the product is safe and meets Industry, OSHA, and ANSI standards (Product Liability).
You may want to confirm that the manufacturer of the product has adequate USA-based Liability insurance and ask if Broad Form Vendors protection is afforded to their distributors/reps. A certificate of insurance confirming these items from them is a good idea and to keep on file.
The Completed Operations exposure starts when a project is completed and is referred to in the insurance world as having a long tail.
The installation aspect of Material Handling distributors range from installing their own products to subcontracting this operation to a third party.
In the event that the installation is subcontracted, the distributor should:
- Have a signed subcontractor agreement with State-specific hold harmless -indemnification wording and clearly outline the insurance requirements. This should be reviewed with legal counsel. A certificate of insurance should be obtained from the Subcontractor confirming that the distributor is named as an additional insured for general liability. This is referred to as contractual risk transfer.
- An installation floater may also be needed depending on the situation.
The lift truck dealers have similar exposures; however, many dealers also lease or rent equipment to the warehouse. Again, the rental agreement should have State-specific wording and clearly transfer both the General Liability and Physical Damage exposure onto the renter (the warehouse).
The dealerships should be named as additional insured and loss payee with a certificate of insurance (or copy of the actual endorsement) obtained to confirm coverage.
No piece of equipment should ever be rented without a signed rental agreement! The Sales, PM, or Service agreements should have a legal review as well.
This a very general outline and we would be happy to speak with anyone individually.
Glenn R. Jacobs CIC, Executive Vice President, Fairview Insurance Agency Associates