And why do you need it?
Valentine’s Day has just passed and the pleasure it brings to scores of people lingers fondly on our minds. Maybe florists do not view the holiday with the same delight, as the hustle and bustle to prepare for the holiday, as Valentine’s Day is one the biggest seasonal peaks for sales during the year. During any seasonal peak the floral inventory is usually significantly larger than at other times of the year.
If you are a florist, hopefully this season went smoothly. But if you experienced a loss of any of your business floral inventory your losses would most likely be higher than normal, based on the value of the larger inventory. Comfortingly, this is one time of the year when insurance coverage may be expanded without an additional cost to you.
If your standard business property policy includes coverage for a seasonal increase your coverage limit may be raised 25% at the time of a loss provided your preceding 12 month average value of your inventory and business personal property is 100% of the policy limit. http://www.assuranceagency.com/blog-post/the-peak-season-endorsement.
This coverage feature is not available when the business is not experiencing a peak season, such as Christmas/Hanukkah/Kwanzaa, Mother’s Day, Valentine’s Day, Easter/Passover, and Thanksgiving. These holidays are all statistically peak seasons for florists. Spring weddings may be peak seasons as well, but the true test depends on your inventory volume and value.
Along with this potential free benefit, you might consider purchasing optional peak season coverage, which provides heightened coverage for possible losses during a peak season. Various insurance carriers offer this expanded coverage in different formats.
For instance, it can be offered as a feature in Florist Business Insurance Policy (Similar to a BOP). State Farm offers this feature. Or it can be offered as a part of a Florist Stretch endorsement utilizing ISO appropriate forms. For example, the Hartford offers such an Endorsement. (See From SS 04 09 09 07). Many other non-captive commercial insurance carriers offer similar endorsements.
American Family offers a hybrid feature where the first 25% seasonal increase is a part of the standard business property policy and another 25% additional coverage is offered as an enhanced endorsement.
Of course, you must first have standard business/commercial property insurance or a bop before you can purchase a stretch or enhanced endorsement in combination with your standard policy. The standard coverage will have a policy limit on the property loss by each type of covered property and the endorsement catapults the policy to a larger value. If you have acquired an endorsement you can tailor the endorsement to list the actual times when you anticipate a peak to occur. If you specify the beginning and ending dates of your peak season in your endorsement policy be sure to allow a little extra time at the beginning and end of your peak to accumulate and dispose of inventory. However, exercise caution so that you don’t extend the time unnecessarily as it might backfire and you could end up with a co-insurance penalty. This type of penalty arises when a loss occurs and the value of the lost property exceeds the percentage of value of the property coverage required in the policy. https://www.eqgroup.com/coinsurance/
As your business grows hopefully your sales will increase which, in turn means you will have a larger amount of inventory. Periodically review the value of your inventory and determine whether your policy limits are still adequate and update the coverage if not. That action can help prevent having a coinsurance penalty issue.
One other coverage issue is closely related to your floral inventory, whether or not you are in a peak season. That is known as spoilage. Flowers and fauna can spoil when refrigeration units break down:
- While at the shop
- in transit to a delivery
- at the sight of an event where you are providing the flowers
- Or when the power goes out due to an outage.
The critical question then becomes: Are all of these events covered under business property insurance or a Florist BOP or are they excluded? To be sure, examine your policy and determine if you need an endorsement for spoilage, refrigeration or utility services interruption, or all of the above.
If you need help with the nuances of your policy don’t’ hesitate to ask questions and discuss with your agent so you can be assured that you are getting a sweet deal.