A firewood company has $500,000 of stock on 12 acres, but the business personal property policy says it is only covered with 100 feet of the building.
A firewood company took out a sizeable business loan. Now the bank wants the firewood company to insure all its firewood inventory. The insured currently has $500,000 of stock on 12 acres. The company already has some business personal property coverage scheduled on each building, but the forms say that it is only covered if it is within 100 feet of the building.
Q: How should all the stock be covered?
Response 1: If you're using the ISO Building And Personal Property Coverage Form, it states the following:
b. Your Business Personal Property consists of the following property located in or on the building or structure described in the Declarations or in the open (or in a vehicle) within 100 feet of the building or structure or within 100 feet of the premises described in the Declarations, whichever distance is greater:
The premises would be the entire 12 acres. But you'll need to know that the entire 12 acres is included in the "premises described in the Declaration."
Response 2: Have the insured move the inventory to within 100 feet of the buildings. Or have the coverage amended to state “within 1,000 feet of a covered building" or some greater distance. Or build an inventory shed that is listed on the policy and have an appropriate contents value set for it to contain the firewood inventory. Or sell the inventory. I could go on.
Response 3: Perhaps a floater or inland marine endorsement would be advantageous. This is usually done for jewelry or coins, but it can be done for property anywhere in the world. It provides coverage for property that is frequently moved from location to location.
Response 4: If the current underwriter will not develop a location description for the 12 acres, go to your inland marine underwriters to see if they could write the inventory on a stock throughput form. Also, check with wholesalers, which might have different markets that understand how to arrange coverage.
Response 5: Get inland marine coverage. You need to cover a fluid inventory, which includes goods in transit.
Response 6: If the policy is actually specific about 100 feet from the building, you'll need to find coverage in an endorsement covering property in the open. But if it's either within 100 feet of the building or within 100 feet of the premises, which would be the 12 acres, you might simply need to increase the limit to comply with the coinsurance requirement, if there is one.
You do need to be sure that the underwriter knows what you are doing. Some insurers would have a problem insuring firewood in the open, and it's your duty to make sure the company knows what you know.
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