Warehouse inventory insurance is an essential protection for businesses that store and distribute goods. It safeguards against financial losses due to damages, lost, or stolen inventory in a warehouse setting.
As a business, investing in warehouse inventory insurance secures your financial interests when storing and distributing goods. Most companies are under the assumption that the invent
ory they store in a 3rd party warehouse or logistic facility is insured by the fulfillment center. This is not true. If you store your inventory in a 3PL or logistic center it is more than likely that they are not insuring your inventory. In fact, if that were the case and you had $5,000,000 in inventory delivered there, would you image that they are calling their insurance broker to add five million in coverage? Not a chance.
They have no insurable interest in your merchandise. Meaning, that if your property is damaged or destroyed, then they have not suffered a loss. Also, if they did insure your merchandise and it was lost, they could not recover money from a claim. This presents a conflict of interest. If that were the case then it would be in their best interest to insure your merchandise, have it destroyed, and then enter a claim to recover the damages. Furthermore, they are also not interested in absorbing the additional cost to insure your goods.
The Importance of Warehouse Inventory Insurance:
- Mitigates risks associated with storing and distributing goods.
- Provides financial protection for lost and stolen inventory.
- Covers the cost of replacement and reimbursement.
- Offers peace of mind for the business.
Why You Need Warehouse Insurance:
- Accidents, weather events, and theft can occur in a warehouse setting.
- Without insurance, the financial burden falls on your business.
- Coverage ensures reimbursement for losses and additional costs.
- Your 3PL or logistic facility is not insuring your merchandise.
How the Cost of Warehouse Inventory Insurance is Determined:
- Type of goods stored and their value.
- The size and location of the warehouse.
- The security measures in place at the warehouse.
- The length of time goods are stored
Obtain quotes from several insurance providers to compare coverage options and costs.
What Warehouse Insurance Covers:
- Damages caused by accidents, weather events, and theft.
- Lost or stolen inventory.
- Reimbursement for additional costs such as replacement inventory or business interruption loss.
When selecting a warehouse inventory insurance policy, it is important to choose a reputable insurance company with a proven track record of settling claims promptly. Ensure the policy provides adequate coverage for your specific warehouse needs and regularly review and update your policy as your business and warehouse needs change.
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