With less than a month remaining until Brexit occurs and still no proper withdrawal agreement in place at the time of writing, organisations throughout the UK are preparing for the possibility of a no-deal scenario. Specifically, border uncertainty has businesses across industry lines fearing for an increase in import taxes. And in response, many have begun stockpiling materials and goods in attempts to decrease their risk. In fact, a recent survey revealed that over 40 per cent of organisations have a Brexit contingency plan that involves stockpiling. While this practice may seem like a proper cautionary tactic, stockpiling comes with risks of its own. Consider the following guidance to ensure your stockpiling procedures don’t result in disaster:
Adjust storage processes—At a glance, stockpiling increases the likelihood of materials and goods being stored in hazardous or unsafe conditions, seeing as the stock isn’t typically stored in those locations. With this in mind, it’s crucial to assess your stockpile storage space and procedures to ensure proper risk controls and make sure all health and safety standards have been met.
Bolster security measures—Stockpiling can also increase the risk of theft, since your supply of goods will likely exceed distribution rates for an extended period and be located in a single storage area. As a result, be sure to implement proper security measures (eg guards, security cameras and restricted access barriers) to prevent break-ins and stolen or damaged stock.
Alert your broker—Most importantly, stockpiling can cause major concerns with your insurance cover in the event of a claim. When stockpiling, it’s vital than you communicate with your broker to update your policy and increase your sums insured.
We really do urge all policyholders to continually review the adequacy of their sums insured, as these can’t be adjusted retrospectively. Most polices carry an average condition, whereby in the event of a loss insurers would scale down a claim in proportion to the level of any under insurance i.e. (Sum Insured ÷ Full Value) x Full loss = The proportion that will be paid by the insurer. The average condition usually applies to all sections of covers, therefore care needs to be taken to ensure that your declared values remain adequate at all times.
You also need to inform your broker if Brexit stockpiling has caused you to buy or lease any new premises or expand trading to new, foreign markets, as these changes will impact your insurance.
All and any changes to your insurances need to be communicated to your broker, to ensure that they are aware of all Material Facts. For further advice or assistance, please do not hesitate to Contact Us on 01384 442 165.