MOP /Stock Throughput Covers – An Analysis – Part 5 – Where Stock is Insured for Full Retail Price do I need Business Interruption Insurance?
There are a great many reasons for my taking this view. In summary they include:
- 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.
- The maximum amount claimable is the difference between the cost price of the stock damaged and the retail price shown on the policy.
- 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.
- 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.
- 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:
- There is no Increase in Cost of Working Coverage
- There is no Additional Increase in Cost of Working Coverage
- 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.