IS YOUR STOCK INSURED?

With talk of merchants being out of stock, longer lead times and cost increases, we’re seeing more stockpiling of building materials than usual. Ben Rickard from Builtin Insurance talks us through the most cost-efficient way to ensure that extra stock is insured

On my recent road trip catching up with builders around the lower North Island, pretty much everyone raised the issue of supply of materials. This included merchants out of stock, much longer lead times on ordering materials and cost increases across the board.

Some of you may be tempted, as a number of our clients are already, to build up your own stock levels. That way, if merchants run out, at least you have some on hand and you can get by.

The value of this stock on hand can soon mount up, so you need to make sure it is covered by your insurance. Building materials are exposed to the usual risks of water damage, fire etc. And because they are in short supply, with prices rising every other week, they are an increasingly attractive target for thieves.

If these materials are allocated to a specific project, they can be covered by contract works insurance under the ‘offsite storage’ extension. This has a sub-limit and is only for materials for that particular job.

If you’ve bought materials that are not for a particular job, then your best bet is to make sure it is covered under a material damage policy. You may already have one that covers your tools and equipment, and stock can generally be added under this too. This is likely to be an ‘anywhere in New Zealand’ policy, so the stock is insured if stored at your yard, in your garage, in your vehicle (although this could be restricted in some cases) or on site. Be sure to increase your ‘sum insured’ by the value of the stock you’re carrying.

If you own premises (eg, a building or yard), the insurance on that building could be changed to include stock as well. Check the stock sum insured amount on your current cover and make sure you increase it if needed. Depending on the wording of your policy, the stock may only be insured at a specific address. If it might be transported or stored elsewhere, you will need to notify your insurer.

Asset register reminder

In February, a customer of ours had their vehicle broken into and tools stolen. Unfortunately, they did not have proof of ownership for some of the larger items, and this delayed settlement of the claim. We fought hard on our customer’s behalf and, when he managed to dig up some pictures of the items, the claim was then settled quickly.

This is a timely reminder that proof of ownership will help get your claim settled swiftly. This could be an asset register such as a spreadsheet or app that holds details of your tools or receipts and invoices or photos. Ideally, you would record each item’s details, serial number, date purchased and value. The same goes for any stock that you’re building up.

In a nutshell

Building materials and tools are always at risk of being stolen, damaged or lost, but recent claims suggest there is an even higher risk than normal of theft. Check the limit for offsite storage under your contract works policy is sufficient and, if you have building insurance, look to add cover for stock and materials too. Also, check if your policy says your materials and tools must be kept at one prescribed location. Understand whether that cover is only at a particular location or if they could be anywhere – such as in staff vehicles.

Builtin are New Zealand’s trade insurance experts. 
For more information visit www.builtininsurance.co.nz or contact Ben at ben@builtin.co.nz or 0800 BUILTIN