Stock in trade: insuring something that changes every day
Short answer
Stock in trade is insured on an agreed sum that should match the maximum expected holding, because compensation is measured against the actual value of stock present at the time of the event.
A fixed sum has two faces
If the sum is set at the average level, a full warehouse means underinsurance and a reduced payout. If it is set at the peak, you pay premium for stock that is absent eleven months a year. So the sum is chosen against the MAXIMUM, not the average — that is where the risk sits.
Documents decide how much you receive
On a claim the holding must be proven: warehouse receipts, invoices, reports. A trader with orderly records is paid on documents; without them the negotiation happens by eye and almost always in favour of the smaller figure.
Where the stock is standing
Cover is tied to the address stated in the policy. Stock moved to a second warehouse, to a supplier or into a van is not automatically covered. If movement is part of the business, it is arranged expressly — otherwise every loss away from the address stays yours.
Frequently asked questions
- Can the sum change during the year?
- Arrangements with periodic declarations of stock exist. Whether they are available depends on the insurer and the size of the business.
- Is consignment stock covered?
- Only if expressly included. Someone else’s goods in your warehouse are a separate matter and are described separately.
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