Is your inventory properly insured?

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A retail business’ success relies on the stock it can carry. To make a profit, you must sell products; as you can’t sell what you don’t have, maintaining a sizeable inventory is imperative. With so much capital invested, insuring your inventory is vital for retailers. At any given time, displayed products and stock are likely at risk of an unforeseen disaster, such as fire or flooding. Finding the right insurance policy to cover your entire inventory range seems like a no-brainer.

Fluctuating Inventory Can Put You at Risk

Many retailers across the country have seen an increase in inventory, which has caused their property values to increase. Why is this happening? It’s because of the influx of furniture, appliances, and other products stuck on ships for the past several months finally delivered.

This problem began back in March, when ports across the nation were slowed for various reasons, like labor disputes with dock workers demanding better benefits and higher wages. Many ships carrying merchandise destined for the United States were forced to turn around during this time. This left retailers with limited inventory and few options to help fill merchandise gaps.

According to the Wall Street Journal, inventory levels for U.S. companies have been severely constrained since the beginning of the pandemic in early 2020. And the cost of holding inventory has increased because goods have been stuck in bogged-down supply chains for longer than regular periods.

The supply chain situation has created a two-fold problem for retailers: The limited inventory during the supply chain congestion and the influx of products as the congestion is starting to clear up. This mass arrival of goods to be sold can put your retail business at risk.

Be Sure Your Property Valuation Remains Accurate

As a business owner, you should check with your insurance agent throughout the year to ensure your property is valued to cover all of your current inventory. If you usually bring in additional products for seasonal sales or the holidays, ensure those items are also included.

With the supply chain issues slowly working themselves out, there is a chance you could end up with a larger-than-normal amount of inventory on hand. If that is the case, ensure your coverage is sufficient to cover the loss if tragedy strikes. Remember that your coverage will not pay the retail price for any loss of goods but the value of replacing those products at cost. Leaving a lapse in coverage in today’s economy could spell disaster for your business.

The Home Furnishings Association Can Help

Since partnering with Gallagher, all HFA members have exclusive access to insurance professionals. Gallagher’s insurance agents have the expertise to ensure you have the coverage you need. They will help you prepare for increased peak-season inventory and ensure your property is properly valued on your policy.

If you have specific questions or would like free risk analysis, please visit https://hfa.ajg.com/


The information contained herein is offered as insurance Industry guidance and provided as an overview of current market risks and available coverages and is intended for discussion purposes only. This publication is not intended to offer legal advice or client-specific risk management advice. Any description of insurance coverages is not meant to interpret specific coverages that your company may already have or that may be generally available. General insurance descriptions herein do not include complete Insurance policy definitions, terms, and conditions and should not be relied on for coverage interpretation. Actual insurance policies must always be consulted for full coverage details and analysis.

The claim scenarios described here are intended to show the types of situations that may result in claims. These scenarios should not be compared to any other claim. Whether or to what extent a particular loss is covered depends on the facts and circumstances of the loss, the terms and conditions of the policy as issued, and applicable law. Facts may have been changed to protect the privacy of the parties involved.

Insurance brokerage and related services to be provided by Arthur J. Gallagher Risk Management Services, Inc. (License No. 0D69293) and its affiliate Arthur J. Gallagher & Co. Insurance Brokers of California, Inc. (License No. 0726293)

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