Stock Insurance
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Business Stock Insurance
Stock insurance, commonly referred to in the industry as material damage insurance, is a specialized form of business insurance that covers the physical stock or inventory of a business against risks such as theft, damage, and loss. This type of insurance is essential for safeguarding not only the physical items but also the contents and stock within a business, providing a safety net for valuable business assets and possessions.
Why is business stock insurance important?
Stock represents a significant portion of a business’s assets. If anything were to happen to this stock, it could cause financial hardships, disrupt the regular flow of business, and lead to business interruption. Therefore, having an insurance policy dedicated to covering stock ensures that a business can recover more swiftly from unexpected events, including accidental damage and fire, and doesn’t need to bear the entire financial burden of such losses.
It’s crucial to have stock cover if your business:
Holds valuable inventory
Operates in theft-prone areas
Faces natural disaster risks
Relies heavily on physical stock
Has business premises and business assets
What does stock insurance cover?
Stock insurance covers losses involving your business contents. This includes:
Additionally, this coverage extends to incidents occurring at the ‘business premises’, ensuring protection across various situations such as alterations, temporary removal of items, rental agreements, and coverage for accidental loss of business money.
Theft
One of the primary concerns for any business is theft. This coverage ensures that if someone breaks into your shop or premises or fraudulently obtains your goods, your policy covers you for loss of the stolen items.
Natural Disasters
Earthquakes, floods, and other natural disasters can strike without warning. This coverage ensures that your stock's value is protected if it's damaged or destroyed by such events.
Accidents happen
Maybe an employee accidentally breaks several items, or a machine malfunctions, ruining your stock. This covers potential cost of such unforeseen accidents that are not related to daily business operations.
How much does stock insurance cost?
Stock insurance premiums are calculated on several different factors including:
- Limit of cover
- Type of industry
- Region of NZ
- Claims History
Stock insurance in NZ typically costs between 0.3 – 1% of the value of your business stock per year.
Who needs business stock insurance?
Small businesses, as a primary beneficiary of stock insurance, should consider it crucial for their operations. Any business that maintains an inventory or stock, be it a retail store, a warehouse, or even an online enterprise, should consider stock insurance. If the loss or damage of your stock would impact your business financially or operationally, stock insurance is essential for you.
Yes! Every business is unique, and insurance policies, including small business insurance, can be customized to match your business’s specific requirements. This adaptability is particularly beneficial for small businesses looking to protect their online operations or ensure the right amount of cover for their business tools through an additional insurance policy. You can adjust cover limits, add additional coverages, or exclude certain perils based on your situation.
While they’re related, they’re not the same. Business content insurance covers the business contents side of your business like furniture, fixtures, and equipment. Stock insurance focuses specifically on the inventory or goods your business sells.
Top industries that need stock insurance
In New Zealand, stock insurance is a safeguard for many industries against losses.
How do I get proof of stock insurance?
You can usually get proof of stock insurance same day when you purchase insurance through Gerrards. Once you have purchased your stock insurance policy, the insurer will provide you with a certificate of insurance. This document serves as proof of your coverage and details the terms of your policy, including the start and end dates, the covered risks, and the insured amount.
Acquiring a stock insurance policy from traditional insurance brokers may require a few weeks, a delay that could create problems for people or businesses who need instant insurance proof.
To obtain stock insurance coverage promptly, contact us. We may require you to provide some fundamental details about your business, such as:
The name of your business
The nature of your business activities
The total number of employees
Predicted annual income
Years of experience in the industry
What does stock contents insurance not cover?
Stock insurance generally does not cover the below situations. To address some of these coverage gaps, exploring insurance options, like a business interruption policy or products liability to cover your legal liability.
General Wear and Tear
Regular wear and tear or the gradual deterioration of stock is not covered.
Intentional Damage
If the stock is damaged intentionally by the business owner or employees, it’s not covered.
Inventory Shortages
Discrepancies due to clerical errors, mismanagement, or unexplained inventory shortages aren’t covered.
War and Nuclear Risks
These are typically excluded from most policies. Events like war, rebellions, or nuclear incidents are not covered.
Personal Contents
Loss of personally owned contents is covered under a contents insurance policy.
Cyber Attack
Most stock polciies exclude losses to stock resulting from a cyber attack e.g. someone hacking into your business and remotely turning a chiller unit off.
Other common questions about stock insurance
Not always. While some policies might offer this cover, others might require an additional add-on or a separate policy to cover goods in transit – especially when it is in transit outside of New Zealand.
Some policies will cover stock stored in off-site locations or third-party warehouses, but it’s essential to specify this when taking out your policy.
Some insurers offer an automatic increase in the sum insured during business peak seasons. It’s essential to discuss this with your insurer or broker.
Regularly! Ideally, review your policy annually or whenever there’s a significant change in your business or stock levels.
Yes, by implementing robust security measures, maintaining a claims-free record, or opting for higher deductibles, you might qualify for discounts. Discussing cover options for these with an insurance broker like Gerrards can guide you through potential savings.
Business interruption insurance is crucial for getting your business back up and running after an unexpected event by covering the loss of income during periods of restoration. It complements stock insurance by not only covering the physical loss of stock but also ensuring that the business money lost due to operational downtime is accounted for. This cover is essential for maintaining financial stability and can be tailored based on coverage duration, factors affecting cover, and the specific process of arranging this insurance.
