The What, When and Why’s of Stock Throughput Policies

If your client’s business involves assembling, importing, exporting, manufacturing, transporting, and/or distributing goodsa Stock Throughput Policy (STP) may be needed to cover their risk exposure. 

What is a STP

A STP is a form of marine coverage that protects a company’s goods throughout the global supply chain- from creation to final destination. These policies provide comprehensive protection for your client’s products and peace-of-mind that these goods—including fragile, sensitive, and high-value items—will be protected during transit and storage.

While specific policy language varies by carrier, STP’s typically provide “all risk” coverage, meaning that all risks are covered unless explicitly excluded in the policy terms. These policies also cover the products in all forms; including raw materials, manufactured products, semi-processed goods, and finished products.

A STP provides continuous coverage for goods as long as the insured has ownership of or responsibility for the product, even when the goods are in third-party hands. In most cases, coverage starts once raw materials are acquired and continues through production, assembly, transit, and storage, until the product reaches the end customer.

Coverage Gaps That STP’s Eliminate

It’s regular practice for a business to insure their buildings, machinery, equipment and warehoused products on a Commercial Property policy – in combination with an Inland Marine policy to cover their goods during transportation. However, this approach frequently results in coverage gaps, such as when goods exchange hands or travel internationally.

A STP provides continuous coverage for your client’s products regardless of how and where they are traveling and where they are being stored; resulting in a more comprehensive insurance solution for the risk.

In today’s global marketplace, a company’s products can take on many different forms and change hands numerous times as they’re shipped from point of origin to final destination. Raw materials could be created in one country, assembled in another, and then stored somewhere else before being shipped to the end-point destination. As these goods travel along the supply chain, they’re exposed to a variety of risks every step of the way.

Perhaps your client owns a toy manufacturing company. The raw materials for the toys are imported from China, then the toys are assembled in California. After assembly, they’re shipped to your client’s distribution warehouse in Arizona, where they’re packaged up and sent to retailers nationwide. Three weeks ago, a shipment of raw materials from China was accidentally damaged at the port while being unloaded from the cargo ship. Then, last week, a pallet of toys was ruined while being transported to the Arizona warehouse. In both cases, the client’s Stock Throughput Policy would cover the damage.

Key Benefits of a STP Include:

  • Continuous, comprehensive coverage. Instead of managing multiple policies simultaneously, like Inland Marine, Ocean Marine, and Property Insurance, a STP provides comprehensive coverage for your client’s goods throughout the international supply chain and while in third-party custody – eliminating many commonly identified coverage gaps.
  • Lower deductibles and premiums. A Marine Cargo deductible is often much lower than a Property Insurance deductible. Since STP falls under the Marine Cargo market, these policies often offer lower deductibles for catastrophic and non-catastrophic risks. Additionally, the Marine Insurance market often provides much lower rates versus traditional Property Insurance markets, which can be volatile.
  • Broader limits. A STP often offers broader limits for weather events, including earthquakes or floods.
  • Streamlined administration. Having one comprehensive policy makes administrative tasks quicker, easier, and more streamlined vs. trying to manage multiple policies. Also, settlement and payment of STP claims is often faster and easier than Property claims.
  • No time limitations. There are typically no time limits on STP coverage, so your client’s goods in transit and in storage are protected throughout the length of the policy.
  • High liability limits. Limits can exceed $100 million per location, which is higher than some other coverage options.

As the global economy expands, more companies are relying on Stock Throughput Policies to protect their goods from beginning to end; removing coverage gaps, simplifying the claims process, providing competitive rates, and most importantly peace of mind to your valued clients. Jencap specializes in this coverage and is standing by to set your client’s business up for success. Contact us today.

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