WEDNESDAY, AUGUST 26, 2020
Any business needs to carry business insurance. For the small business owner with cost and convenience in mind, a business owners policy, also called a BOP, often proves the solution. The policy will offer a variety of essential commercial coverage, including possessions insurance. Among the items possessions insurance covers might be stock and inventory. This is a critical piece of coverage, but what can you do to ensure you have the most appropriate protection? 
The reason you buy BOP possessions coverage is simple. It will help you replace possessions damaged in a variety of hazards or perils in the business. Upon buying coverage, you will be able to insure a variety of items.
The policy might pay for possessions damaged in fires, severe weather, theft, vandalism or similar losses. If your policy covers both the possessions and hazard in question, then it will compensate you for the loss. So, you won’t suffer a large financial setback as you try to pick up the pieces of the accident.
That is especially true when it comes to stock and inventory. You wouldn’t want to shell out a lot of reserve cash as you try to restock the business. The right possessions insurance can cut the chances of such a hardship occurring. Your policy will help you stay in a strong financial position as you weather an unexpected storm.
Coverage for Stock and Inventory
Your BOP's possessions coverage will address stock and inventory. However, you will have to consider a few conditions to fully understand this coverage.
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Most policies pay for lost stock based on the price that it cost the business to buy or make the item. This is not the retail price on the price tag.
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To calculate coverage limits, you will likely have to account for the flow of goods into or out of the business. It is a good practice to take regular inventories of all products in your store. This will help you track the appropriate value within your store.
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As items appreciate or depreciate in value, this might impact your coverage. Some policies will only pay cash value for certain damaged stock. So, if an item loses value, then you might not receive the full value needed to buy a new item.
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Keep in mind, possessions insurance often includes deductibles. If you claim lost stock, and that claim value is less than the deductible value, then your policy won’t pay at all.
Additionally, most business insurance policies offer loss of income coverage. When loss of stock occurs, this might impact cash flow into the business. So, your policy can often help you recover a portion of the money lost as a result of the accident.
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