In previous posts we have stated that one if the mainstays of commercial insurance in the UK is that you can only cover, or insure, something in which you have a financial interest. So, you own, or have mortgage on, a building and if it burned to the ground you would suffer a financial loss. Either you have lost you nest egg or you will have to continue paying a mortgage on a property that doesn’t exist.
Whereas, if your next door neighbour buys a building, you cannot take out a policy on it. If this building suffers a loss, why should you be paid out?
There are situations though when you do need to arrange cover for some physical asset that does not belong to you. One of these situations arises in regard to warehouse insurance. As a business, you may accept payment from third parties who will store their products at your premises. Or, you may operate a fulfilment warehouse, you store stock for a third party and then pick and pack it as and when they tell you once they have a sale.
In both of these scenarios, the stock is not yours. You do not have legal title to it, but in the event of a loss, it was in your care or custody. In these situations, you are able to arrange insurance for said stock, on the proviso that your contract terms and conditions state that you are responsible. They should say that you provide cover up to £x and there is an excess of £y.
Many insurers shy away from these types of risks as you could be storing literally anything. Best process to follow is to get on the phone to a broker, speak to them, get them to understand the risk and ask them to quote.