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Does your business need stock insurance?

16/03/2023

A forklift loads vital goods into a lorry, which can be protected with stock insurance.

Stock is the lifeblood of dozens of industries.

Retail, fashion, manufacturing, consumer electronics, craftsmen. Having the right stock at the right time is crucial to having a successful business.

But what if something happens that interrupts the usual flow of stock? It could be a global shortage of something, a fire, a flood, theft, or even a broken-down lorry.

Whatever the problem is, it’ll cause big headaches for you.

Near the top of the list is replacing the stock. With inflation topping 10% in the UK in early 2023, this could set you back £thousands.

Not to mention that you might struggle to serve your customers in the short term.

Sound like something that might keep you up at night? Then you probably need stock insurance.

How much stock should you put in insurance?

As a business, it’s easy to chalk stuff off as an ‘extra expense’.

After all, you already have so many other things to pay for. Especially given the rising costs of running a business. Higher rents, expensive energy bills, customers spending less money...

82% of small business owners have said that rising costs are having a negative impact on their business in 2023.

With the state of the economy, it’s fair to consider whether stock insurance is worth the expense.

The easiest way to decide whether it’s worth it is to think about how reliant your business is on its stock:

  • If the stock you have stored now was destroyed, what would happen?
  • How much would it cost you to get back on your feet?
  • Would you be able to continue trading?
  • Would you have to close your doors while you wait for new stock to arrive?
  • Do you have times of the year when you store more stock, like Christmas or Halloween?

These kinds of questions are important to think about.

Hope for the best, prepare for the worst

While you might be paying a small premium now to protect your stock, you’re securing your finances in the future if the worst were to happen.

For many businesses, especially smaller ones, a stock problem would cause both short and long-term problems.

In the short term, you might struggle to service customers or send out products. In the long term, you’d have to pay to replace your stock, maybe even at a more expensive rate if you needed it quicker.

The right insurance can get rid of the financial stress that a stock disaster can bring.

Get the right insurance

At this point, you’ve probably realised that you need to be insuring your stock. But what’s the best way to do that?

Well, the short answer is: some kind of stock insurance. It’s designed to pay to replace any of your stock that is damaged or stolen.

A lot of insurers will allow you to buy standalone cover for your stock. But it’s more common to include it as part of your business contents insurance. That way, all your cover for the things you rely on to run your business is in one place. You can also tie it into your public liability or professional indemnity insurance.

It really depends on what makes the most sense for your business.

As well as covering the stock that you store at your main premises, it’ll also cover your stock when it’s:

  • In transit to you. Just remember that your stock isn’t covered once you ship it out to a customer.
  • At the home of a director, partner, or employee of your business.
  • At a location where you’re attending a promotional event or expo.

Take stock of your situation

We already talked about the state of the economy earlier. So you’re probably wondering ‘how much is stock insurance going to set me back?’.

Well, it’ll depend on a few things:

  • The amount of cover you need
  • What your business does
  • Your annual turnover
  • How much stock you have at any one time
  • Where you store your stock
  • What kind of stock you have
  • Whether you do any work outside the UK.

Another important thing to remember is that you should have enough cover to replace your entire stock inventory.

If you don’t, a claim could leave you underinsured. You’d have to pay the difference to replace the stock that isn’t covered. And some insurers will even reduce your claim amount if it turns out that you’re underinsured.

Easy does it

Protecting your stock doesn’t have to be complicated. And it definitely doesn’t have to be expensive.

For more information, take a look at our stock insurance page. Or if you have any burning questions, you can give us a call on 0345 561 0320.

Image used under license from Shutterstock.

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