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Business Insurance Tips: 3 Ways to Cover Your Stock

Tyler Vogelsberg • Dec 13, 2018

Your stock is one of your most valuable business assets. You may have a lot of money tied up in raw materials and the stock you hold before you distribute it to your customers, so it makes sense to keep it comprehensively insured.

Your business insurance should give you some automatic stock protection; however, this may not be enough to meet your needs. You should consider increasing your coverage to avoid under-insurance.

If you use bulk transit delivery methods or your stock needs to be stored in a climate-controlled environment, business insurance is even more important. How does business insurance cover your stock?

1. General Stock Cover

Your core business insurance policy covers your buildings and contents. It protects your stock from perils like fire, accident, damage and theft. For example, if some of your stock was stolen from your warehouse in a burglary, you would include the costs in a theft claim.

This insurance mainly focuses on damage or loss that happens on your business premises. However, some policies also give you some cover for stock that you have temporarily moved to a different location.

Your stock protection may be limited by a dollar amount, in which case you should ensure that this amount is enough to cover your losses. If it isn't, you may need to increase the amount to get full protection. This usually also increases your insurance costs.

Some business insurers also weight stock coverage on a seasonal basis. This may be useful if the amount of stock you hold fluctuates during the year. For example, if you have a lot more stock in the run-up to Christmas, then your insured amount would be higher during that period than it would during the rest of the year.

2. Goods in Transit Cover

If you use bulk transit deliveries when you ship stock to your customers, then you need to think about what would happen if a shipment was damaged or stolen. For example, if a truck carrying your stock was in an accident and caught fire, then some or all of your stock would be damaged.

If this happens, you need a way to recoup your losses. Goods in transit insurance protects against this kind of event.

This cover is usually added to your core policy as an extra. In some cases, you get blanket coverage against accidental damage and specific events like collisions, fire and theft. In others, you choose from different packages offering differing levels of protection.

3. Deterioration of Stock Cover

Deterioration of stock cover is a useful add-on if your raw materials or stock need to be stored in climate-controlled conditions. This insurance protects you if your raw materials or stock become unusable or unsaleable because of a mechanical breakdown or power supply problem.

For example, if you sell chilled products and you have a power outage or cold storage breakdown, then you may lose stock if it can't be kept at the correct temperature. Deterioration of stock cover pays you for any raw materials or stock you lose for this reason.

This cover is often bundled into equipment or machinery breakdown cover. It may be offered as standard within this cover or as an add-on benefit. Depending on your insurance company, equipment or machinery, this insurance may be included as part of your core business insurance or added as an optional extra.

If your stock is one of your main assets, but you aren't sure how to get the right cover to protect it, then talk to Westralian Insurance. We can help you build a business insurance portfolio that comprehensively covers anything that might happen to your stock. To learn more, contact us.

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