This clause requires insurance on inventory (stock) that moves through a warehouse or distribution center—covering goods from the moment they arrive until they're sold or shipped out. For example, if you operate a warehouse holding 10,000 items worth £500,000, stock throughput insurance reimburses you if those items are damaged, stolen, or destroyed by fire while in your care. This matters legally because you (the warehouse operator) are responsible for goods in your possession, and if you lose or damage them, the owner can sue you for the full value—insurance protects you from that liability. This is high-risk because the coverage amount must match the actual value of stock at any given time, and underestimating that value leaves you exposed. The clause typically specifies the maximum value of stock covered and requires you to report stock levels regularly.
This is a high-risk clause, so take it seriously: get an independent valuation of your typical stock levels and insure for *at least* that amount, plus 20% for seasonal peaks. Negotiate for the other party to share the cost if they're supplying the stock or if you're storing it on their behalf—don't bear the full insurance cost alone. Require a clause that allows you to adjust the coverage limit quarterly as stock levels change, so you're never underinsured or paying for unnecessary coverage.
Frequently Asked Questions
What does this clause mean in simple terms?
This clause requires insurance on inventory (stock) that moves through a warehouse or distribution center—covering goods from the moment they arrive until they're sold or shipped out.
Why should I care about this clause?
For example, if you operate a warehouse holding 10,000 items worth £500,000, stock throughput insurance reimburses you if those items are damaged, stolen, or destroyed by fire while in your care.
What are my options?
This matters legally because you (the warehouse operator) are responsible for goods in your possession, and if you lose or damage them, the owner can sue you for the full value—insurance protects you from that liability.
How does this affect small businesses?
This is high-risk because the coverage amount must match the actual value of stock at any given time, and underestimating that value leaves you exposed.