Underinsured Stock

When considering your cover, it’s important to make sure your Sum Insured is accurate and up to date, taking into account seasonal ups and downs of your business and how changing circumstances can impact insurance needs. Policies should be reviewed regularly, especially during times of change or significant growth, to avoid a nasty shock if a claim is made.


A garden centre arranged insurance cover to include theft of stock. The Sum Insured was based upon normal stock levels throughout the year, not taking into account the seasonality of the business. With increased demand over the Christmas period, the garden centre was required to store a 40% higher level of stock. This situation is similar year-on-year.


Given the increased stock stored within the garden centre in the run-up to Christmas, it became a target for thieves. They broke in, taking advantage of the heightened stock levels.


Because the stock value at the time of the theft was significantly higher than the Sum Insured, the claim was settled on a proportionate basis, covering 71% of the stock value. Not having sufficient funds available to make up the 29% shortfall, the garden centre could not fully restock, impacting their trading levels.

Key takeaways

Underinsurance is a false economy

Being underinsured can put your business at risk. If you need to make a claim and your level of cover isn’t adequate, it may mean you won’t get the sum needed to recover after a loss.

Changing circumstances demand changes in cover

Whether diversifying, downsizing, expanding or adapting business models, these shifts will inevitably impact insurance needs.

How to avoid this scenario

Expert support

We can work with you, along with expert underwriters, to help understand and recommend suitable levels and periods of indemnity for your business.

Regular risk assessments

If the business had notified their broker that they were carrying more stock than anticipated when the policy was taken out, the cover could have been amended to suit the business’s changing requirements.

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