As the global economy expands, many businesses have more exposures to the transportation of their goods, both domestically and internationally. Traditionally, the responsibility for insuring goods travelling overseas fell on freight forwarders, while local insurers would provide coverage for cargo within the country. However, that arrangement led to potential gaps in coverage when loading and unloading cargo.
In the 1970s, insurers began to devise a type of marine coverage that could address this gap—something called a stock throughput (STP) policy. An STP policy provides end-to-end coverage for the insured’s cargo, both on land and on water.
What Does an STP Policy Cover?
An STP policy is meant to provide protection for the flow of goods from the production point to the final destination, typically covering physical damage to inventory—including works in progress and finished goods—while in transit. An STP policy can help provide continuous coverage to inventory throughout the entire supply chain.
In general, STP polices have the following three components:
STP policies are designed to integrate transportation, inventory storage, material handling and packaging by protecting the shipment of raw materials, works in progress and finished goods.
Why Would I Need an STP Policy?
Often, organizations will carry several policies to ensure deliveries make it to their customers safe and on time. While this insurance solution works for some, general coverage for goods often doesn’t include protection against catastrophes. What’s more, most insurance doesn’t provide coverage when your goods are in transit or when you ship goods to another country.
STP policies are essentially all-in-one policies that provide broad coverage, lower insurance costs and reduce insurer conflicts created by multiple policies. Premiums for STP policies are adjustable, allowing companies to purchase coverage that better suits their business.
What’s more, many STP polices can provide regulatory coverage, split limits on transit and storage, and reduce gaps in loss settlement significantly.
Benefits of STP Policies
STP policies are growing in popularity for a variety of reasons. Benefits of this type of coverage include the following:
Although wholesale, retail, and food and beverage industries have historically benefited the most from STP policies, any industry sector with significant inventory and transit exposures can benefit from them.
Contact Steers Insurance to see whether an STP policy is right for your organization. We have the expertise to help you mitigate your risks and protect your bottom line.
Insurance brokers do not work for an insurance company, they work for you. That’s the key thing that separates them from all other purchase options. It means you have more advice, more choice, better pricing and a representative that’s on your side in the event of a claim.