The short answer
Your stock fluctuates, and your sum insured needs to be able to keep pace. Identify your peaks, storage locations and goods that do not belong to you, then have the insurer confirm the valuation basis and how to adjust the contract. A fixed figure may no longer reflect what is actually exposed on the day of a loss.
Map stock over twelve months
Take a year of business activity and record, month by month, the approximate value of your merchandise, raw materials and finished products. Peaks soon become apparent: deliveries before the festive season, preparation for a season, bulk purchasing at a favourable price. It is this pattern, rather than the accounting average, that shows what a fire or water damage could affect.
Also record where the stock is located: main warehouse, shop, external storage, vehicles, trade fair or client premises. The policy describes insured locations; stock moved elsewhere warrants a check.
Distinguish what belongs to you
Goods entrusted to you by clients, goods on consignment and hired equipment are not treated in the same way as your own inventory. Identify them separately, together with the contract specifying who must insure them. This distinction avoids discovering afterwards that part of the stock had not been accounted for anywhere.
Clarify the valuation basis
Purchase price, replacement cost, production value: the basis used depends on the contract and the type of property. Ask for it to be confirmed in writing. If the sum insured is substantially below the actual value, compensation may be reduced under the rules set out in the policy; there is no single calculation that applies to all contracts.
Insurers present property insurance as cover for property at agreed locations, with values to be reviewed regularly. Read what your own policy provides for: adjustments during the year, periodic declarations or a fixed sum.
Establish a simple routine
Set two review points during the year: before your main peak and after the year-end stocktake. Each time, compare the actual value with the sum insured and decide whether an endorsement is needed. Keep inventories and invoices somewhere accessible even if the premises are inaccessible.
Frequently asked questions
Must stock be insured at its maximum value all year round?
Not necessarily. Some contracts allow the sum to be adjusted or values to be declared periodically. Compare these arrangements with the cost of maintaining a high sum throughout the year, then choose what matches your actual stock pattern.
Is stock stored with a partner covered?
That depends on the locations specified in the policy and the agreement with the partner. Notify the insurer of this location and request written confirmation before moving significant values there.
What happens if the sum was too low?
Compensation may be reduced under the rules of your contract. That is why a review before peaks is preferable to discovering the issue at the time of a loss.