The Peak Season Endorsement
For many manufacturers, a steady production pace throughout the year might be the norm, but some manufacturers might experience periods of time where production is increased – called a “peak season.” At that time, the value of the total personal property on the premise is also increased. So how can a manufacturer ensure that the limits on their property policy address these ebbs and flows appropriately? One possibility is to utilize a peak season endorsement.
For small to medium-sized manufacturers, insurance coverage might be provided through a business owners policy (or BOP). This type of policy generally has a peak season provision automatically built into it, which provides an additional 25% of coverage over and above the business personal property limit if a loss occurs during a peak season. One caveat to this coverage is in order for the peak season endorsement to apply, the business personal property limit on the policy must be equal to or greater than 100% of the average monthly business personal property value.
If a manufacturer’s property insurance coverage is provided by a separate property policy, or a property policy that is part of a package policy, a peak season endorsement – check out this example – may be added to this policy. With this type of endorsement, specific time periods can be added with precise increased limits to appropriately address a peak season or even multiple peak seasons. When determining the peak season start and end dates for this endorsement, it’s important to allow for extra time on both ends for extenuating circumstances, such as early or delayed deliveries of stock. If for some reason your personal property limits peak prior to, or continue after, the dates on your peak season endorsement and you suffer a loss, coverage may end up being both inadequate and then possibly subject to a coinsurance penalty.
If you’re a manufacturer that experiences increased business personal property exposures due to production peaks, it’s important to discuss this with your insurance professional. If you already have a peak season provision or endorsement on your policy, then communication of any changes to your peak season dates and/or limits to your insurance professional is also key in minimizing your risk. If you need help, a member of the ‘A’ Team can address this endorsement with you.
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