Protect Your Business from Vendor or Supply Chain Liability
Why what happens to your vendors—can happen to you.
Picture this: A key supplier in your network suddenly shuts down due to a cyberattack. Your materials are delayed, your production stalls, and your customers are unhappy. Worse yet, you’re left holding the bag for lost revenue, missed deadlines, or even legal claims. Sound far-fetched? Unfortunately, it’s a growing reality for many business owners.
In today’s interconnected economy, you may think your risk stops at your front door—but it doesn’t. If a vendor makes a mistake, or a supply chain interruption causes losses, your business could face serious financial and reputational consequences. That’s where vendor and supply chain liability protection comes in.
At Hertvik Insurance Group, we help business owners navigate this evolving risk landscape. Here’s what you need to know to protect your company before a vendor issue becomes your issue.
Know Who You’re Working With—and What They’re Responsible For
Your first line of defense is due diligence. Not all vendors carry the same level of insurance, compliance, or reliability. It’s your job to know the difference.
For example, if a third-party logistics partner mishandles your product shipment, causing damage or delay, you could still be held accountable to your customer. Similarly, if a contractor’s faulty work on your premises results in injury, lawsuits may land on your doorstep, especially if that contractor doesn’t carry proper liability coverage.
Best Practice: Request certificates of insurance (COIs) from all vendors and subcontractors, and regularly verify that policies are current and meet your business’s risk standards. Don’t assume—confirm.
Understand Your Contractual Risk Transfer
Contracts are more than just formalities; they’re essential risk management tools. How you write your agreements with vendors can make all the difference in a claim situation.
Look for indemnification clauses, hold harmless agreements, and insurance requirements. For instance, does your vendor agree to cover damages if their negligence leads to a data breach? Are you named as an “additional insured” on their general liability policy? These legal safeguards can protect your business financially and legally when things go wrong.
Best Practice: Work with legal counsel and your insurance advisor to review vendor contracts before signing. Your Hertvik agent can help identify where liability coverage should be extended or clarified.
Insure Against Supply Chain Disruptions
Even the most airtight contract can’t stop a factory fire in Taiwan or a trucking strike in the Midwest. That’s where supply chain insurance coverage comes into play.
Contingent business interruption (CBI) insurance, for example, can help cover lost income when a key supplier suffers a covered loss that affects your operations. It’s especially relevant in industries like manufacturing, distribution, construction, or retail, where vendor reliability is critical to keeping business moving.
Let’s say your exclusive raw material supplier is shut down due to a natural disaster. With CBI coverage, you may be able to recover lost income during the downtime. Without it? You’re absorbing the loss entirely.
Best Practice: Talk to your Hertvik agent about whether your current policy includes CBI, and if it applies to your specific supply chain risks.
What You Can Do
Business liability doesn’t stop with what happens inside your company—it extends to who you partner with, how you structure agreements, and how well you plan for the unexpected.
Here’s a quick action list to help protect your business from vendor and supply chain risks:
- Review your current vendor agreements for insurance and liability terms.
- Request and track up-to-date certificates of insurance from your vendors.
- Assess whether you have adequate contingent business interruption coverage.
- Talk to your Hertvik Insurance agent about customized risk management strategies for your supply chain.
Have Questions About Your Vendor or Supply Chain Risk?
Hertvik Insurance Group is here to help. Our business insurance experts can review your policy, evaluate your vendor contracts, and recommend the right coverage to protect your operations from third-party liability and supply chain disruption.
Contact your Hertvik Insurance agent today to make sure your business is protected from the risks you don’t always see coming—until it’s too late.