Stockpiling ahead of Brexit could lead to Underinsurance
Many UK businesses have taken the decision to stockpile goods ahead of Brexit to alleviate possible (some would say inevitable) disruption to their supply chain. Pharmaceutical companies, food importers and manufacturers have all been very vocal on the subject.
Airbus has talked about their concerns and their contingency planning: Describing that they are stockpiling parts due to uncertainty and inevitable disruption to customs regulations and that the associated costs run into double digit millions. Majestic Wine were concerned enough about their supply chain post-March 2019 that they were planning on stockpiling more than a million extra bottles of wine.
Any organisation taking the decision to store extra stock, or build up raw materials and parts, must consider the impact on their sums insured and inform their insurance broker immediately to ensure that they are adequately covered.
Post loss, insurers will apply underinsurance penalties when sums insured are not adequate. Businesses will suffer a double whammy of losing valuable stock or other goods as well as having to find additional monies to meet the shortfall in their pay-out from insurers.
20% underinsurance would reduce a £1,000,000 claim by £200,000. Don’t wait until renewal to amend your insured level of stock, inform your broker now.