MOP /Stock Throughput Covers – An Analysis – Part 5 – Where Stock is Insured for Full Retail Price do I need Business Interruption Insurance?

bigstock-Business-Interruption-Sign-39078256The simple and firm answer to this is YES YOU DO.

There are a great many reasons for my taking this view.  In summary they include:

  1. If there is no Business Interruption cover in place, the  only time the Insured can claim for any consequential loss of profits is following a loss of stock.
  2. The maximum amount claimable is the difference between the cost price of the stock damaged and the retail price shown on the policy.
  3. If the stock would have been turned over more than once during any period of disruption a significant uninsured loss can ensure as the maximum amount claimable for Business Interruption is the difference between the cost price and selling price of the stock damaged.
  4. Disruption to a business results from many other property losses other than stock. These include: damage to the building, fixtures and fittings, machinery and plant,  and or other contents owned by the Insured or; damage to property not owned by the Insured but used by them at the situation.
  5. On my research going back over 40 years, I estimate that 30% of disruptions arise through no damage to insured property at all. Significant claims can arise and are typically insured in some form under an ISR policy but not a MOP policy. These risks include: Public Utilities outages; Damage to a Complex in which the Insured is located; Prevention of Access; Murder or Suicide; Outbreak of infectious disease; Customers’ Premises (Australia only but can be extend to include overseas as well); Suppliers’ Premises (Australia only but can be extend to include overseas as well)

Other serious concerns with a MOP cover that can be overcome by insuring them separately under an ISR policy are:

  1. There is no Increase in Cost of Working Coverage
  2. There is no Additional Increase in Cost of Working Coverage
  3. There is no coverage for loss management/claims preparation and/or accounting  services.

I hope this is enough to convince you that having the traditional Business Interruption cover is far superior to the very limited interruption protection afforded by insuring stock for retail price.


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