Goods are not always where they are owned. A production site keeps pallets of finished goods at a distribution centre two hundred kilometres away, spare machinery in a warehouse it shares with a sister plant, and raw material at a third-party store near the port. Then the value request arrives, each site reports what it owns, and the insured values for stock held at another site land on the wrong address.
Why the address matters more than the owner
An insurer prices property risk by physical location. The sprinklers, the fire sections, the construction, the occupancy and the flood zone all belong to the building the goods are standing in, not to the plant that paid for them. Stock reported at the owning plant is priced against that plant's protection and that plant's natcat exposure, while the warehouse where it actually sits is priced as if it were half empty.
Two things go wrong from there, and they pull in opposite directions:
- Double counting. The plant reports the stock because it owns it. The warehouse reports the same stock because it can see it on the shelves. The programme is placed on a total that is too high, and the premium follows.
- Missing value. Each site assumes the other one reported it. The warehouse burns and the loss adjuster finds a building insured for a fraction of what was inside it.
Both are avoidable, and both come from the same gap: the value request asks each site for one number, and one number cannot say where the goods are.
The three questions an underwriter actually asks
A location schedule has to answer three different questions, and a spreadsheet with a single stock column answers at most one of them.
- What stands at this address? This is what the insurer prices: the site's own goods plus everything other sites keep there. It is the number that decides whether the warehouse is adequately insured.
- What does this plant own, wherever it stands? This is the plant's exposure, and the number its finance team recognises from the balance sheet.
- Which warehouses does this plant depend on? A fire at the distribution centre stops the plant that ships through it. Risk engineers ask this before they ask anything about the plant itself.
If your value collection only records the first or the second, the third has to be reconstructed by phone in the week before the submission goes to market.
How to report stock held at another site
The rule that keeps every number right is short: record the value on the site that owns the goods, against the site where the goods stand, and count it toward the address. In practice:
- Name the holding site, not just the amount. "3,000,000 of stock at Rotterdam Distribution Centre" is a fact the underwriter can price. "3,000,000 held elsewhere" is not.
- Use the currency of the contract. A warehouse contract in Polish zloty should be recorded in zloty. Convert once, at the valuation date, for the whole programme, rather than site by site.
- Say what the goods are. A note that reads "finished goods, pallets, sprinklered high-bay" saves the risk engineer a visit.
- Let the warehouse report only what it owns itself. If the distribution centre has been reporting everything on its shelves, its own figure has to come down before the plants record what they keep there. Otherwise the first off-site entry counts the stock twice.
- End an arrangement on purpose. A warehouse contract that ended in March is still in the sheet in September unless someone removes it. Leaving a site out of the new request is not the same as saying the goods are gone.
- Keep last year's figure next to this year's. A stock position that doubled at a warehouse is either a new contract or a mistake, and the underwriter will ask which.
Third-party warehouses
A logistics provider's warehouse is not your site, but your stock in it is still your exposure, and the insurer still prices the building. Give it an address of its own, with the construction, protection and occupancy you would collect for any plant. The COPE questions are the same, and the provider's own inspection report usually answers most of them. A third-party location without COPE information is a gap in the submission, whether or not the goods are on your own premises.
How 21RISK records it
In 21RISK an off-site value is recorded on the owning site's values page, in a Held elsewhere section under Stock and supplies or Machinery and equipment: the site where the goods stand, the amount in its own currency, a note, and attachments. The value counts toward the holding site's total insured value, because that is the building the insurer prices, and never toward the owning site's. Both sites see the arrangement: the owner as value held elsewhere, the warehouse as value held here for other sites.
The Values table then answers all three questions on one screen. The ordinary Stock and supplies column shows what stands at each address. A second column shows what each site owns including what it keeps at other sites, so a plant reads its whole stock exposure on one row. And the Off-site values view lists every arrangement in force for the period, one row per owning site and holding site, so a filter on one warehouse gives the total it holds for others and a filter on one plant gives the total it keeps away from its own address. Arrangements carry forward from one renewal to the next until they are ended, and every change appears in the history of both sites.
The mechanics are documented in insured values held at another site . The rest of the value request, from one request per site to insurer-ready numbers, is on the value collection page. If you want to see the stock question answered on your own site list before the next renewal, talk to us .