Underinsurance could be storing up trouble for wine and spirit importers/exporters

To avoid underinsurance, you need to consider whether duty is included in your stock value.

It's important for wine and spirit importers/exporters to make sure that their insurance coverage accurately reflects the value of their stock, taking into consideration whether duty paid is included. This is to avoid the risk of being underinsured in the event of a loss.

Bonded warehouses v non-bonded warehouses

If you store your stock in a bonded warehouse, it's appropriate to insure the value of the stock, excluding duty.

A bonded warehouse is a secure area where goods, including alcohol, are stored without immediate payment of customs duty. The term 'bonded' refers to the bond or guarantee that the warehouse operator must provide to customs authorities. This setup is particularly beneficial for importers and exporters as it allows them to defer duty payments until the goods are moved out of the warehouse.

However, if duty is not included in the stock value, it's not advisable to use a non-bonded warehouse or other types of stock storage unit in the UK or abroad or to store goods on your own premises.

The risk of underinsurance

To avoid underinsurance, you need to consider whether duty is included in the stock value, especially for business interruption values.

Underinsurance occurs when your insurance coverage is not enough to cover the total cost of a loss or damage. This means you may have to pay a significant amount out of your own pocket if something goes wrong.

Having adequate insurance cover ensures that the indemnity period (the time you have to recover from a loss) is long enough to restore your business to the same financial position it was in before the loss occurred.

How we can help

Our insurer partners specialise in providing comprehensive insurance cover for importers, exporters, breweries, and distilleries. We tailor our propositions to meet the specific needs of your business, offering protection for property, stock, liabilities, and business interruption. Additionally, we can arrange cover for marine cargo, trade credit, fleet, and other associated risks.

We also offer risk management audits and reviews to ensure your business is adequately protected.