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Finished stock insurance

Finished stock and inventory insurance is an additional safety net for businesses that carry and maintain physical goods or products. This policy protects businesses from financial loss if their stock is lost or damaged.

What is finished stock insurance?

Inventory and stock insurance is a policy that's built to help protect your small business from unforeseen losses that can jeopardize your inventory.

Whether it's due to damage, theft, or another covered peril, finish stock insurance serves as a key risk management element to minimize financial burdens and enable you to recover the monetary value of lost or damaged inventory.

Finished stock insurance is often used when speaking about agriculture-based products, while the terms inventory insurance or business personal property (BPP) coverage are used when referring to non-agriculture goods.

However, finished stock coverage offers ancillary benefits beyond BPP insurance, such as product spoilage, power outages, spillage, and malicious damage.

This coverage is typically added as an endorsement to your commercial property or business personal property insurance policy.

What does finished stock insurance cover?

Stock and inventory coverage helps small business owners recuperate the costs of replacing insured inventory if it's damaged, destroyed, or stolen.

Specifically, finished stock insurance provides coverage for:

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Burglary and theft

Finished stock insurance protects against losses due to theft of inventory and damage to your business property from burglary or attempted burglary. This includes forcible entry or exit from your insured property.

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Fire and natural disasters

This policy covers the financial burden of lost inventory due to fires and natural calamities, such as:

  • Storms and lightning
  • Hurricanes and cyclones
  • Floods and inundation
  • Earthquakes

Depending on where your business is located, your property insurance policy may have exclusions for certain natural disasters. Check with an insurance agent to ensure you have coverage for common risks in your area.

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Inventory insurance also includes coverage for losses resulting from malicious property damage, such as vandalism or intentional damage by third parties.

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How much does stock insurance cost?

A small business owner calculating their commercial property insurance costs

The cost of a finished stock insurance policy will vary for every small business based on a number of factors used during underwriting.

Some of these factors include:

  • The type and value of stock
  • Inventory storage conditions
  • Business size and location
  • Claims history
  • Policy limits, deductibles, and endorsements

Perishable and high-risk items, as well as poor storage conditions and industry risks can lead to higher premiums.

Taking the proper steps to protect your inventory can help lower your insurance costs.

Who needs finished stock insurance?

Finished inventory insurance is an important type of coverage for any company that stores and maintains agricultural-based stock at their business. Because inventory can be a significant investment for many small businesses, if it's lost or damaged, it can disrupt operations and lead to financial strain.

Retailers, such as a grocery store, and food and beverage manufacturers would benefit from carrying a finished stock policy, especially if their products were damaged or destroyed during a fire or flood.

This is especially true for cannabis business owners. The loss of marijuana, CBD products, and other inventory could be financially devastating.

What is the difference between finished stock and crop insurance?

While both finished stock and crop insurance cover financial burdens from inventory damage or loss, they protect your stock during different phases of production.

Crop insurance, most often used by cannabis cultivators to protect crops grown indoors or in approved greenhouse facilities, offers coverage for agricultural products such as seeds, seedlings, flowering plants, and harvested plants.

This policy covers losses due to theft, fire, vandalism, and equipment breakdown related to environment control/monitoring and pumps/compressors.

Finished stock insurance covers any actual stock that’s in its final stage ready to be sold. This would protect your business from any lost income should your inventory be damaged and unable to be sold.

It's best to speak with your dedicated insurance agent to know which policies meet your insurance needs and budget.

Other important policies for businesses that purchase finished stock coverage

While finished stock insurance can be an important part of your risk management plan, you should consider these other types of business insurance to fully address your risk exposures and protect your company from financial losses:

General liability insurance protects against the most common business risks, such as customer slip-and-fall injuries. Many states also require this coverage for some small businesses.

Business income coverage, also called business interruption insurance, offsets lost net income if your business is forced to close because of a covered peril, such as inventory and property damage. This policy can usually be included with finished stock coverage.

Commercial auto insurance covers the legal costs and property damage from accidents involving your cannabis business's vehicle. It also covers vehicle theft and vandalism.

Workers' compensation insurance is required in most states for cannabis businesses with employees. Workers' comp also protects sole proprietors from work injury costs that personal health insurance might deny.

Surety bonds guarantee your cannabis business will fulfill the terms of its contracts and pay its suppliers. Many states require a surety bond as part of licensing requirements.

Product liability insurance covers defense costs if a product harms a customer or damages their property. It's recommended for growers, sellers, and distributors of cannabis products.

How to get finished stock insurance with Insureon

Are you ready to safeguard your business with finished stock insurance? Complete Insureon’s easy online application to get quotes from top U.S. insurance companies. You can also speak with a licensed insurance agent to find the best, most affordable policies for your unique business needs.

Once you find the right business insurance, you can begin coverage and get a certificate of insurance in less than 24 hours.

Updated: March 11, 2024
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