Wholesale Insurance

Example

“The construction company's broker arranged wholesale insurance coverage for all subcontractors working on the project, providing liability protection at a fraction of individual policy costs.”

Memory Tip

Think 'buying in bulk at Costco' - wholesale insurance means buying coverage in large quantities for better rates.

Why It Matters

Wholesale insurance makes coverage more affordable for small businesses and individuals who might otherwise struggle to obtain adequate protection. It provides access to comprehensive coverage options that would be prohibitively expensive if purchased individually, helping protect financial security across entire industries or groups.

Common Misconception

Many people think wholesale insurance means lower quality coverage because it costs less per person. In reality, wholesale policies often provide the same or better coverage than individual policies, with the cost savings coming from reduced administrative expenses and risk spreading across larger groups, not from reduced benefits.

In Practice

A trade association representing 500 small plumbing contractors purchases wholesale general liability insurance. Instead of each contractor paying $3,000 annually for individual coverage, they each pay $1,800 through the wholesale program. The association saves its members $600,000 collectively while providing the same $1 million per occurrence coverage. The insurance carrier benefits from reduced underwriting costs and a diversified risk pool across multiple states.

Etymology

The term combines 'wholesale,' from the medieval practice of selling goods in large quantities at reduced prices, with 'insurance,' derived from the Latin 'securus' meaning secure.

Common Misspellings

Related Terms

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See Also