For most retailers, the fourth quarter is make-or-break. Shelves fill with holiday merchandise in October and November, back rooms overflow, and inventory values can be double what they are in spring. If your property limit was set for an average month, a fire or burglary in December could leave you badly underinsured.
How inventory is valued in a claim
Most commercial property policies pay for inventory at your replacement cost — what it costs you to buy it again — not the retail price. If your limit is lower than what you actually had on hand, you'll be paid only up to the limit, and a coinsurance clause can reduce payment further.
Options for seasonal swings
- Peak season endorsement: increases your inventory limit for specific dates, such as October 15 through January 15.
- Reporting form: you report inventory values monthly and pay premium based on actual values.
- Higher year-round limit: simple, but you pay for coverage you don't need most of the year.
Don't forget business income
Losing your store during the holidays means losing your best sales weeks. Business income coverage should be based on what you'd lose if peak season were interrupted — not an average month.
Off-site inventory
Holiday stock is often stored in warehouses, storage units or second locations. Make sure off-premises property is covered.
Keep records
Keep purchase invoices, inventory reports and photos in the cloud so you can document a loss quickly.
Call before the rush
A five-minute conversation in October can add a peak season endorsement before the trucks arrive.
Your holiday inventory is your year's profit. Insure it like it.
This material is for general information only. Coverage depends on the actual policy language, and availability varies by carrier.