Insurance tips for businesses with seasonal inventory

For many businesses, the year is defined by a few busy weeks. Garden centres gear up for spring, gift shops and retailers stock up for Christmas and food producers, event suppliers and seasonal attractions all see their stock levels swing dramatically across the year. That swing creates a very particular insurance challenge: the stock you hold in October may be worth several times what you hold in February.

If your policy is only set up for your average stock level, you could find yourself under-protected at exactly the time you have the most to lose. As a commercial insurance broker serving businesses across the UK, we regularly help owners get this right. Here are our top tips.

1. Insure for your peak, not your average

The sum insured on your stock cover should reflect the highest value of stock you expect to hold, not the figure you reach when business is quiet. If a claim arises during your busiest period and your cover is based on a lower figure, your insurer may treat you as underinsured and reduce the payout proportionately. This is known as the “average” clause, and it catches out more businesses than you might expect.

2. Ask about seasonal stock increase cover

Many insurers offer a seasonal or peak stock extension. This allows you to temporarily increase your stock sum insured for a set period, such as the run-up to Christmas, without paying for that higher level all year round. Be sure to agree the dates and the maximum amount in advance and check that the cover starts early enough to include the weeks when you are building up stock, not just the sales period itself.

3. Keep accurate, up-to-date stock records

Good records make both your cover and any claim far smoother. Keep a regular stock-take, record when stock levels rise and fall, and store your records somewhere that would survive a fire or flood, such as in the cloud. Following a loss, clear evidence of what you held and what it was worth can make all the difference to how quickly you are paid.

4. Check where your stock is and how it moves

In peak season, stock often ends up in places it does not normally sit: temporary storage units, a spare unit on the estate, a pop-up shop, a market stall or a delivery van. Many policies only cover stock at the address shown on your schedule. Tell your broker about any additional locations and check whether goods in transit are covered, including deliveries to customers and collections from suppliers.

5. Review your security and your risks

Fuller premises and more valuable stock can make a business a more attractive target. Insurers will often expect specific security measures, such as approved locks, alarms or shutters, particularly where large amounts of stock are held. Check that you meet your policy conditions, especially when stock levels rise. It is also worth thinking about seasonal risks like winter storms, flooding, burst pipes and increased fire risk from additional electrical equipment or decorations.

6. Do not forget your seasonal staff

Taking on temporary or seasonal workers? Employers’ liability insurance is a legal requirement in most cases, and it applies to temporary staff, casual workers and many agency workers as well as permanent employees. Make sure your policy reflects your increased headcount and that any wage roll or employee numbers you have declared are accurate.

7. Protect your income as well as your stock

If a fire or flood stopped you trading in your busiest weeks, the lost income could hurt far more than the damaged stock. Business interruption insurance can cover lost gross profit and ongoing costs while you recover. Make sure the sum insured and the indemnity period reflect the fact that your profits may be concentrated into a short season and ask your broker whether your cover accounts for this.

8. Consider online sales and cyber risks

If you sell online, seasonal peaks bring a spike in orders, payments and customer data and cyber criminals know it. Ask about cyber insurance and check how your stock is covered while it is waiting to be dispatched or when it is being held by third-party fulfilment partners.

9. Review your cover well before the season starts

The best time to talk to your broker is before your busy period, not during it. Give yourself time to review your sums insured, add any extensions and compare options. A short conversation early in the year can save a great deal of stress, and expense, later on.

In summary

Before your next busy season, check that you have:

• Peak stock values reflected in your sum insured, rather than your average
• A seasonal stock extension with dates that cover your build-up as well as your sales period
• Every location and journey your stock will use, including temporary storage and transit
• Security measures that meet your policy conditions
• Employers’ liability cover that reflects your seasonal staff
• Business interruption cover that matches your seasonal income

Talk to QMT Commercial

Every business is different and the right cover depends on your stock, your premises and the way your year unfolds. QMT Commercial is a well-established commercial insurance broker in Kent, serving businesses across the UK. We can review your current arrangements, check you are properly protected through your peak season and find cover that fits. Get in touch with our team today for a no-obligation chat.

This article is for general information only and does not constitute advice. Policy terms, conditions and exclusions vary between insurers, so please speak to your broker about your own circumstances.