Manufacturer’s Selling Price – A Cheap Endorsement That Can Save You Big Money
The cost of any product differs from business to business. As a manufacturer, a great example of this is product stock that you hold for sale. The value of that stock lies not only in the cost of its parts, but in what you’ll eventually sell it for – your profit.
But a standard property policy doesn’t include that additional value. Even with a replacement cost policy you’re going to receive only the cost to “replace” the stock (Note: Many policies will provide a selling price valuation for your finished stock that you have sold but haven’t yet delivered). For finished stock that has not yet been sold, this can be a serious area of underinsurance because not only are you losing the true value of the damaged products, it could also take some time to replace those products.
Luckily there’s an easy and low-cost solution; you can add a selling price endorsement to your property policy. This endorsement changes the payment you receive on damaged stock to equal the selling price rather than merely the cost to replace. Because of the drastic difference between these two prices – the price to replace vs. selling – all manufacturers and their insurance professionals should have a discussion about the necessity of this endorsement for their business.
Carriers may provide selling price coverage via a policy enhancement or add-on, but be careful that there’s no sublimit (e.g. $ 25,000) that reduces what you can collect. The better option is to make sure you have a separate endorsement that applies to all stock and doesn’t have a sublimit. The cost for such an endorsement is usually minimal and can often be negotiated for no-cost.
The selling price endorsement is a very simple addition, but not having it can cost you big. It’s precisely these types of details that are elemental to your insurance program, and it’s attention to these details that makes Assurance your go-to broker.
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