What is a stock throughput policy? In typical insurance programs, many manufacturers insure their buildings, machinery, equipment and warehoused inventory under a property insurance policy and also insure the shipment and transportation of their product under a marine cargo policy. With a Stock Throughput Policy (STP), the warehoused inventory is insured through the marine cargo policy instead of the property policy. The STP covers physical loss or damage to all stock and inventory at risk of loss, whether in transit or at a storage warehouse. There are a number of reasons why an STP may be right for your risk.
Benefits of a Stock Throughput Policy
There are several potential benefits to insuring inventory through an STP. The first benefit is the reduction of the property premium when the inventory values are deducted from the property insurance program. This premium credit will usually more than pay for the additional premium to add inventory to the marine cargo program, as typically a marine cargo policy has more competitive rates.
In addition to being a more affordable way to insure inventory, an STP may also offer the following benefits as compared to a property insurance program:
- A marine cargo deductible is often much lower than a property insurance deductible.
- An STP may offer broader limits for earthquake, flood and named windstorm—and at lower marine cargo rates. Additionally, claims involving catastrophic perils do not erode available limits for the property program.
- Settlement and payment of STP claims is often easier and faster than settlement and payment of property claims.
Right for You?
For proper evaluation, a comparison of available coverage, deductible and costs associated with insuring stock and inventory must be made between the property insurance program and an STP:
- Are available limits, including catastrophic coverages, as comprehensive, or better, in an STP?
- Is the applicable deductible for loss to stock and inventory lower in an STP?
- Is the premium credit for extricating stock values from the property program approximately, or greater than, the additional premium to cover the stock in an STP?
If the answer is yes to any or all of these questions, an STP may be right for you.
If you would like help reviewing your insurance coverage or assessing your risks, please contact your Hylant client executive or property and marine industry expert Andrew Urban at 419-259-6048.