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Mid-market insurance
Stock throughput insurance is a single policy covering goods from when a business takes on risk at the supplier, through transit and storage, until delivery to the customer. It matters because separate property and transit policies often leave gaps at the handover points.
Part of: Commercial insurance
In short
Stock throughput insurance covers goods throughout the supply chain under one policy: at the supplier once risk passes, in sea, air and road transit, at ports, in your own warehouses and third-party logistics sites, and in stores until delivery. It grew out of marine cargo insurance and is usually rated on declared turnover or throughput, with limits per location and per conveyance. It suits importers, distributors, consumer brands and retailers whose stock moves through several hands. Buildings, machinery, liability and business interruption normally stay on separate policies.
Stock throughput insurance covers physical loss of or damage to goods throughout their journey: from the point your business takes on risk at a supplier, through sea, air and road transit, storage at ports, your own warehouses and third-party logistics sites, and on to stores, wholesale customers or end consumers. Instead of a property policy for stock at named premises and a separate transit or cargo policy for goods on the move, one policy follows the goods.
It is usually arranged on an all risks basis, subject to listed exclusions, and it is built around how stock actually moves through the business rather than where the business happens to own buildings. Premises, machinery and business interruption are normally still insured elsewhere.
Stock throughput grew out of marine cargo insurance. Cargo policies have long covered goods from warehouse to warehouse, including the land legs either side of a voyage. The Marine Insurance Act 1906, section 2 recognises this, providing that a marine policy may, by its express terms or by usage of trade, be extended to protect the assured against losses on inland waters or on any land risk which may be incidental to any sea voyage.
Stock throughput takes the idea further, covering storage periods and inland movements that are not simply incidental to a voyage. Because of these origins it is often written on cargo-style wordings in the marine market, which is why terms such as institute clauses, per-conveyance limits and declarations appear in it. As with any business insurance, the Insurance Act 2015 duty of fair presentation applies, so stock values, locations and loss history need to be presented accurately.
For background, see marine cargo all risks and the Marine Insurance Act 1906.
| Feature | How it commonly works | What to check |
|---|---|---|
| Valuation basis | Often cost price for goods in transit and storage, with selling price for goods sold but not yet delivered; cargo legs may use invoice value plus a percentage | That the basis matches your terms of sale and how you would replace the stock |
| Limits | A limit per conveyance (ship, aircraft, vehicle) and a limit per location | Peak values at each warehouse, port and store, not averages |
| Declarations | Premium set on estimated annual turnover or throughput, then adjusted on declared figures | Declaration dates and what happens if values are under-declared |
| Locations | A schedule of known sites, often with automatic cover for unnamed locations up to a smaller limit | Whether new 3PL sites and pop-up stores need notifying |
| Exclusions | Commonly inherent vice, insufficient packing, delay, unexplained shortage and wear and tear | Temperature variation, theft from unattended vehicles and mysterious disappearance wording |
Under-declaring has the same effect as underinsuring a building: claims can be reduced proportionately. See underinsurance and the average clause for how this works.
Separate property and goods in transit policies can work well for a business with one warehouse and local deliveries. As supply chains spread across countries and third-party sites, gaps tend to appear at the handover points.
| Situation | Separate property and transit covers | Stock throughput |
|---|---|---|
| Stock held at a third-party logistics warehouse | Property cover may be limited to named premises; the operator's own cover is usually limited liability, not the full value of your goods | Usually covered as a scheduled or unnamed location |
| Goods waiting at a port or consolidation depot | May fall between the cargo policy ending and the property policy starting | Usually continuous |
| Goods damaged by a haulier | Recovery from the carrier may be capped, for example under the Carriage of Goods by Road Act 1965 for international road carriage | Your own policy pays, then the insurer pursues the carrier |
| Stock at a customer's site on sale or return | Often outside both policies | Can be included if declared |
| Seasonal stock peaks | Fixed property sums insured may be too low at peak | Declarations and location limits can reflect peaks |
One policy also means one claims process, without arguments between a property insurer and a cargo insurer over where the loss happened.
Stock throughput usually suits businesses where stock is a large share of the balance sheet and moves through several hands: importers, distributors and wholesalers, consumer brands selling in stores, wholesale and online, retailers using outsourced fulfilment, and food and drink businesses importing ingredients or finished goods. Brands such as hot tub and spa importers with bulky, high-value units are a typical fit.
It may add less for a manufacturer whose value sits mainly in buildings and machinery, or a business whose stock rarely leaves one owned site. Buildings, plant, liability and business interruption normally stay on separate policies. Some stock throughput wordings offer limited cover for loss of profit or extra costs following damage to goods, but this should not be assumed. Businesses with overseas entities may also need local policies co-ordinated through a global insurance programme.
A brand keeps most of its pre-season stock at a third-party fulfilment site. A fire destroys the building. The brand's property policy lists only its head office, and the operator's contract caps its liability well below the stock value. A stock throughput policy with that site scheduled would usually respond to the stock loss, subject to the location limit and terms.
A container is damaged by a crane at a UK port while awaiting collection. Under separate covers the cargo policy and property policy might each point to the other. Under stock throughput the goods are covered throughout, and the insurer can pursue the port operator. For more on carrier losses, see the cargo loss scenario.
Bring a map of your supply chain, peak and average stock values by location, annual throughput by route, terms of sale and supply, and any loss history. Warehouse insurance and importer insurance pages cover related points, and an insurance programme review can test whether stock throughput would simplify your programme.
Apex arranges stock throughput and transit insurance for UK businesses; a broker reads every enquiry.
Not quite. Marine cargo insurance covers goods in transit, usually warehouse to warehouse, with land legs incidental to the voyage. Stock throughput builds on cargo cover and adds storage at warehouses, third-party sites and stores, so one policy covers goods both moving and at rest. It is often written in the marine market on cargo-style wordings.
Usually only for stock. Buildings, machinery, contents other than stock, liability and business interruption normally stay on a separate commercial property or combined policy. The two policies need to be co-ordinated so stock is not insured twice or left out at a particular location.
It is commonly rated on estimated annual turnover or throughput values, with the premium adjusted once actual figures are declared. Location limits, conveyance limits, the valuation basis, loss history and the security of storage sites all influence terms. Accurate declarations matter, because under-declaring can reduce claims.
Usually, if the site is scheduled or falls within the cover for unnamed locations, subject to the location limit. This is one of the main reasons businesses choose stock throughput, because the logistics provider's own insurance and contract usually limit its liability well below the value of your goods.
Yes, in practice. The delivery terms in your supply and sales contracts usually set when risk in the goods passes to you and when it passes to your customer. The policy should be arranged to start and end at those points, so check the terms used with each supplier and customer.
Send us your current schedules or renewal pack and we will review the whole programme and tell you plainly what to keep and what to change. No fee and no obligation. Or call 0117 325 0027.
Book a programme review Get a quoteApex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales, company number 07014570. This page is general information, not advice on your individual circumstances, and it does not guarantee that cover will be available or on what terms.
