Your Seasonal Inventory Is Covered If You Have a BOP
Whether you sell jewelry or baby clothes, backpacks or hand soaps, your small business typically has a season when you increase inventory to accommodate demand. Your property and liability insurance should include seasonal inventory coverage if you have a Business Owners Policy or BOP.
In addition to covering your physical store, the BOP provides coverage for other business property, namely your inventory. The policy recognizes that holidays—or a whole season, if your business thrives in the summer, for example—will have you increasing your products for seasonal inventory.
The value of your inventory with this fluctuation is an automatic 25% increase in your policy limit for business personal property.
The seasonal escalator applies only if you have insured business property to at least 100% of your average monthly values during either the 12 months preceding the loss, or the period of time you have been in business as of the date of the loss, whichever is the lesser.
But What Else Should You Cover?
With an increase in seasonal inventory, your company becomes a bigger target for thieves. To protect from potential losses, you should consider adding Burglary and Robbery Coverage to your Business Owners Policy. Another risk you can add protection for is Employee Dishonesty coverage.
Another thing to consider is insuring your merchandise while it’s in transit. While it’s usually insured by the transportation company, the limit may not be high enough or the coverage sufficiently extensive. You can add more coverage with a transportation floater. That will cover your property while it’s being transported from one point to another, or while it’s in the care, custody, or control of others.
And it’s always a good idea to discuss any changes in your business with your insurance agent to ensure you’re completely covered. See our case study “Have You Ever Read Your Commercial Insurance Policy Cover-To-Cover?” for the potential risks of underinsured.