Written by William Paull
Co-Founder & Account Director
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What is the seasonal stock clause in business insurance?
If your shelves fill up before Christmas, Mother's Day or harvest, your policy may already cover some of the extra stock. The business packs we place include a seasonal stock clause. On most of them, it lifts your stock sum insured (the figure your stock is insured for) by 50% during your busy season. It sits inside the contents and stock cover of your business insurance pack, and it starts by itself.
How does the automatic seasonal increase work?
The clause usually starts when your turnover, sales or stock run at least 20% above your average for the rest of the policy year. The test compares your business with itself, so the month does not matter. A pool shop's October peak counts the same as a Christmas one. Some policies name covered seasons instead, so the test and dates depend on your policy.
Your stock may sit inside one combined contents figure on your schedule, the page of your policy that lists each cover and its figure. If it does, the lift applies only to the stock part of that figure.
The same period reaches other parts of the policy. The stock figure under your theft cover usually lifts by 50% as well, and so does your money cover. On the business packs we place, a bank or public holiday increase in your money cover does not add on top of the seasonal increase. Whether tobacco and alcohol share in the theft lift differs from one policy to the next. Our guide to theft cover explains how that section works.
Do you have to tell the insurer when your busy season is?
Not on most policies. The insurer needs no dates in advance, and there is nothing to apply for.
What you do need is proof. If you claim during a peak, the insurer will generally ask for financial records that show it.
Where does the seasonal increase stop helping you?
How high it goes. The seasonal increase usually adds 50% of your stock sum insured. Some policies add it to a property payment limit already above the sum insured, so the figure under your property cover can differ from the one under your theft cover. The seasonal cover on our clients' policies is generous enough that we have hardly ever needed to arrange more. If your peak runs past it, we can discuss increasing the seasonal cover or your stock figure for the year.
How long it lasts. The lift usually runs for up to 126 days in total across the policy year, and every peak draws on those same days. A business with several peaks, or one long trading season, can use them up. The cover then falls back to the base figure until the policy year ends.
The figure it starts from. The clause lifts whatever base figure you set, so a short base stays short at the peak. Stock goes into that figure at what it would cost you to buy it again, counted at cost plus freight and duty, not what you sell it for. We explain what belongs in your contents and stock figure and what the extra cover would cost, so you can decide.
Is your stock figure ready for your next peak?
Three questions, and you can answer all of them before your next renewal.
- Does your peak clear the 20% bar? Pull last year's monthly figures. If your busiest month sits less than 20% above the average of your other months, the clause may never switch on for you. Your base figure then has to be right all year.
- Is your peak higher than the seasonal cover allows, or longer than the 126 days it usually runs? If it is either, the lift alone will not carry it.
- Is your base stock figure at cost price, and is it current? Check it against what the same stock would cost you to buy again today.
Frequently asked questions
What records do I need if I claim during my busy season?
You need financial records for at least the previous two years that show the busy period ran above your normal trading. That is what the insurer usually asks for on the policies Consolidated Insurance Brokers places. A business trading for less than two years uses its records from the date it started trading instead. These are figures your accountant already prepares, so the work is keeping them on file.
What counts as a seasonal increase period?
Most policies use periods when turnover, sales or stock run at least 20% above the average at other times in the policy year. Some instead name Christmas and Easter periods without the 20% test, then apply it to other qualifying celebrations. A peak tied to harvest or a trade cycle may need agreed dates added to the policy.
Does the seasonal increase cover me if my stock doubles?
Only part of the way. Say your theft cover insures stock for $200,000 and increases that figure by 50% during a qualifying busy period. Its seasonal limit is $300,000. At a $400,000 stock peak, that leaves $100,000 above the limit before any excess. On some policies your property cover reaches higher. If your seasonal cover is short, we can discuss arranging more.
Does the seasonal increase fix underinsurance on my stock?
No. The lift starts from the figure you set, right or wrong. Your stock cover is still tested against its true value at the start of your policy period. If it falls short, a partial loss can be scaled down in proportion. A total loss is paid only up to your policy's limit, which on some policies sits above the sum insured. Our guide to the co-insurance clause works through the test.