Halloween. Black Friday. Christmas. Boxing Day Sales… Seasonal stock increases are part and parcel of the season for many businesses and it’s easy to leave the extra stock uncovered by your policy - after all, it will be gone soon! But it’s important to make sure you’re not left underinsured and you’ve taken appropriate security measures at this time of year.
We have compiled some advice to make sure that if you do have large stock fluctuations, you are aware of the two main insurance-related pitfalls to avoid.
When you set up your business insurance, you will have declared a value for your stock held and that will be the limit of the sum insured. Obviously, this can fluctuate over the course of the year but as we enter the festive season your stock may increase significantly.
Underinsurance happens when your sum insured doesn’t cover the value that is actually present. If you have a claim in such circumstances, you may face the insurer only paying a portion of it. This can happen even if you haven’t suffered a total loss as the insurer can apply an insurance condition called ‘Average’ which allows it to apply a reduction to the settlement which is in proportion to the percentage shortfall in sum insured, leaving you out of pocket.
You may not need to worry about changing your policy though because insurers are aware that certain businesses experience stock level fluctuations and, some policies have a seasonal increase clause which covers stock changes up to a certain percentage increase. Check your documents to see if you have this and what percentage increase is covered.
If you don’t have a seasonal increase clause in your policy wording, check the value of your stock insured and the value of your stock held so that you can get in touch with your broker or insurer to get some advice.
As highlighted recently by FSB's Business Crime Report, theft and security is an ever-present concern for businesses, especially smaller businesses who might take more time to recover from a loss. As stock levels increase in preparation for the festive period, businesses become more attractive to thieves who might take advantage of the situation so, a quick check of your security arrangements and whether they continue to meet your Insurer’s Requirements, is a sensible precaution.
When you first arrange your business insurance, insurers will often ask that you meet some basic safety and security requirements in order to take on the ‘risk’. As values at risk change, so do those Insurer Requirements so, don’t get caught out.
There’s a lot of technical terminology and jargon used in respect of premises security so, you might find this link to our blog on the subject helpful. It covers general terms used about locks, grilles and alarms.
In the meantime, if your value at risk has significantly increased, we recommend a quick chat with your broker or Insurer to make sure that you are fully covered.
For more information about how we can help you with your insurance needs, call us on 020 3883 7976 between 9am – 5.30pm Monday to Friday.
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