Insurance of goods in a warehouse: prices in Kazakhstan

Insurance of goods in a warehouse, insurance of warehouse property, warehouse insurance.

Insurance of warehouse property is known in practice by many names, which do not always clearly reflect the legal nature of this type of insurance or correctly describe the direction of its protection. Insurance of goods in a warehouse should not be confused with comprehensive warehouse insurance and property insurance, since it concerns solely the goods stored in the warehouse, and not the warehouse as a property complex. This is the first, but not the only, mistake made when agreeing a contract for insurance of goods in a warehouse. The growth of trade turnover in Kazakhstan makes businesses think about concluding a contract for insurance of warehouse property or goods in a warehouse. Alongside its popularity, a contract for insurance of goods in a warehouse has subtleties and nuances that require special attention and legal preparation; in addition to the contract there are insurance terms and rules, which must be studied carefully before starting work on insuring goods in a warehouse. If the information provided has not fully covered the question, see other materials.

Why warehouse property needs to be insured

Let us divide those who want to insure a warehouse into several categories:

  1. Warehouse owners who lease it to the owners of goods but bear obligations for the safety of the warehouse property entrusted to them. A contract for insurance of goods in a warehouse is also of interest to this category, because under a storage contract it is the warehouse owners who are answerable to the lessees for the safety of the property and who, in the event of theft, fire, or a burst water or sewage pipe, will cover the losses caused to the owner of the goods.
  2. Owners of goods. Not all businesses have their own properly equipped warehouse premises, and goods are an investment and sometimes the main source of profit.

Contract for insurance of goods in a warehouse

In its stages, concluding a contract for insurance of goods in a warehouse is not very different from any other insurance contract:

  1. Completion of an application form for insurance of goods in a warehouse. The first nuance here is determining the sum insured, that is, the value of the goods. Since goods are not constant but, on the contrary, change regularly, Polis Re recommends stating the maximum possible amount of goods held in the warehouse.
  2. Agreeing the insurance terms and the contract for insurance of goods in a warehouse.
  3. Signing the contract and paying the insurance premium.

When studying the terms of insurance of goods in a warehouse, pay particular attention to the exclusions from insured events — events to which insurance protection will not apply — to the insured risks that are included in the cover and for which the insurance company undertakes to pay compensation, and to the deductible.

How much insurance of goods in a warehouse costs

The cost of a contract for insurance of goods in a warehouse depends on a number of factors:

  1. the conditions in which goods are stored in the warehouse (the presence of security and an alarm, the state of fire hydrants, distance from fire stations);
  2. the nature of the goods;
  3. the packaging of the goods;
  4. the length of storage and turnover;
  5. the quality and methods of accounting for and releasing goods in the warehouse.

Because of the large number of factors affecting the cost, we will not state an exact tariff and simply recommend turning to Polis Re for a correct and competent calculation. You can estimate the order of cost in advance in the warehouse goods insurance calculator.

Which risks are usually included in the cover

The set of risks is determined by the insurance rules of the particular company and by the contract, but most programs include:

  • fire, lightning strike, explosion, as well as damage from firefighting;
  • damage by water from water supply, sewage and heating systems and fire-extinguishing systems;
  • natural disasters: earthquake, flood, storm, hail, heavy snowfall;
  • burglary, robbery and armed robbery;
  • unlawful acts of third parties — intentional damage to or destruction of goods;
  • falling aircraft, and a vehicle driving into the warehouse building.

For warehouses in seismically active regions of Kazakhstan, including the earthquake risk should be discussed separately: special limits and deductibles are often set for it. Extensions can also be agreed: breakdown of refrigeration equipment and spoilage of goods due to a change in temperature, breakage of fragile goods, and damage during loading and unloading.

What is usually not covered

  • natural loss, shrinkage, leakage and spoilage of goods because of their inherent properties;
  • a shortage found during stocktaking, if there are no signs of theft or another insured event;
  • theft by the policyholder's employees, unless that risk is included separately;
  • damage caused by a breach of storage conditions of which the policyholder was aware;
  • intentional acts of the policyholder, hostilities, and confiscation of property by decision of government bodies;
  • goods not listed in the contract or stored at a different address.

How to determine the sum insured correctly

The main practical difficulty is the constantly changing stock. In insurance practice there are several approaches:

  • a fixed sum based on the maximum stock in the warehouse during the period — this is simple, but in months with low stock the client in effect overpays;
  • insurance with declaration of stock — the policyholder regularly reports actual stock, and the premium is recalculated at the end of the period;
  • insurance based on average stock with a limit on the maximum value of goods in the warehouse at any one time.

It is important to remember underinsurance: if the sum insured turns out to be lower than the actual value of the goods on the date of the loss, the rules of many companies provide for proportional payment — the compensation is reduced in the same proportion as the sum is understated. Therefore, saving on the sum insured often results in a noticeable shortfall in payment when there is a large loss.

What to do when an insured event occurs

  1. Take measures to reduce the damage: call the fire brigade, shut off the water, secure the remaining goods.
  2. Report to the competent authorities: to the police in the case of theft, to the fire service in the case of fire, to the operating organization in the case of a utility network failure.
  3. Notify the insurer within the period set by the contract and, if possible, do not change the scene of the incident before inspection, unless this is needed for safety.
  4. Prepare the documents: warehouse accounting data, waybills, stocktaking records, documents on the value of the goods, and certificates from the competent authorities.

Clear warehouse accounting is the main argument in settlement: without it, it is hard to prove which goods, and in what quantity, were in the warehouse at the time of the event.

Typical mistakes

  • insuring the building instead of the goods, or vice versa, without working out who owns what and who is responsible for what;
  • not informing the insurer of a change in the nature of the goods or the storage conditions;
  • not agreeing all storage addresses in the contract;
  • not reading the list of exclusions and the requirements for security and alarms, a breach of which can become grounds for refusal.

For more on protecting business property, see the business property insurance section. To select terms for your warehouse and goods, you can get a consultation.