Summer is often one of the busiest times of the year for wholesale distributors and manufacturers. Warehouses begin filling with inventory in preparation for increased production, seasonal demand, and fourth quarter sales. While inventory levels increase, insurance limits often remain unchanged.
This is one of the most common coverage gaps we see. Businesses that were properly insured six months ago may now be significantly underinsured simply because inventory values have grown.
A mid-year insurance review can help ensure your coverage reflects the value of what is actually sitting on your shelves today.
Seasonal Inventory Increases and Business Personal Property Limits
Business Personal Property, commonly referred to as BPP, protects inventory, equipment, furniture, machinery, and other business assets. As inventory levels fluctuate throughout the year, your BPP limit should be reviewed as well.
Consider questions such as:
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Have inventory levels increased significantly since your last renewal?
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Have replacement costs increased due to inflation or supply chain changes?
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Have you added new product lines or expanded warehouse space?
If your policy limits no longer reflect current values, a loss could result in a much larger financial impact than expected.
Understanding Coinsurance and Undervaluation
One of the most misunderstood provisions in commercial property insurance is the coinsurance clause.
If your property is insured below the required percentage of its value, your insurance carrier may reduce the amount paid on a claim, even if the loss is only partial.
For example, imagine a warehouse that should be insured for $2 million but is only insured for $1.2 million. Even a relatively small fire loss could result in the business receiving substantially less than expected because the property was undervalued. Many business owners do not discover this until after a claim occurs.
Business Income Protection During Peak Sales Periods
The cost of repairing a building or replacing inventory is only part of the equation.
If a fire, storm, or equipment failure forces your operation to shut down during your busiest season, lost revenue can quickly exceed the physical damage itself.
Business Income coverage helps replace lost income while your business recovers. It can also help cover continuing operating expenses so your business can remain financially stable during the interruption.
As sales increase throughout the year, Business Income limits should be reviewed to ensure they accurately reflect current operations.
Should You Consider a Peak Season Endorsement?
Many businesses experience predictable increases in inventory throughout the year.
A Peak Season endorsement automatically increases certain property limits during designated months when inventory values are highest.
This endorsement can be an excellent solution for businesses that routinely build inventory before major sales seasons.
Rather than increasing limits for the entire policy period, Peak Season coverage provides additional protection only when it is needed most.
Celtic Shield Can Help
At Celtic Shield Insurance Group, we help wholesale distributors and manufacturers make sure their insurance program keeps pace with their business. Inventory changes, operational growth, and market conditions all affect your risk profile throughout the year.
A policy that was accurate at renewal may no longer reflect today’s exposure.
📞 If inventory levels have increased this year, now is the perfect time for a mid-year coverage review to make sure your business is insured to value.
