The policy that insures a warehouse is not the same one that insures the goods inside it. They're two distinct coverages with two distinct policyholders, and confusing them is why some brands discover their inventory wasn't covered on exactly the day something happened.
It's a dry topic, which is why almost nobody reviews it before signing. It's worth twenty minutes now instead of finding out later.
The two policies that aren't the same
The building policy is held by whoever operates or owns the warehouse. It covers the structure, infrastructure, racking, forklifts and the operator's liability. It's the one that almost always exists and the one you'll hear about first.
The goods policy covers the value of stored product. This is the one to ask about separately, because it may be held by the operator, it may be yours to arrange, and in many cases it exists but with a limit far below your inventory's value.
A warehouse being insured does not mean your product is. Those are separate questions and they deserve separate answers.
What's usually covered and what isn't
Coverage varies by insurer and policy, so treat this as a general map rather than a definitive list. The point is knowing what to ask.
| Usually covered | Usually excluded or needs added coverage |
|---|---|
| Fire and explosion | Damage from handling during operations |
| Water damage from building systems | Shrinkage, unexplained shortages |
| Natural events (depending on zone) | Product expired or degraded over time |
| Theft with forced entry | Theft without forced entry (pilferage, internal) |
| Structural collapse | Product poorly packed at origin |
The two rows that surprise people most are theft and shrinkage.
Forced vs. unforced entry. Many standard policies cover theft when there's evidence of forced entry — a broken door, a cut lock — but exclude gradual removal that leaves no trace. Which happens to be the most common kind of warehouse loss.
Shrinkage and shortages. When the physical count doesn't match the system and there's no identifiable event, it usually isn't an insurable claim: it's an inventory variance, resolved in the service contract rather than the policy. That's why your contract with the operator matters as much as the insurance.
The point that decides everything: how your goods are valued
This is where brands lose money without realizing it. A policy can pay out at cost value (what the product cost you) or at replacement/sale value (what it costs to replace today). The gap can be 40% or more.
There's a second number just as important: the maximum limit per event. If your peak-season inventory is worth 4 million pesos and coverage caps at 1 million, you're 25% covered precisely when you're most exposed. October and November inventory peaks are exactly when that cap falls short.
Seven questions to ask before signing
- Are the stored goods covered, or only the building? Get the answer in writing.
- What's the maximum limit per event? Compare it against your inventory value in your peak month, not an average one.
- What value does it pay out at: cost or replacement?
- Does it cover theft without forced entry? If not, ask what physical and access controls compensate for it.
- What's the deductible? A high deductible makes coverage irrelevant for mid-sized losses.
- What's explicitly excluded? Ask for the exclusions list, not the sales summary.
- Do I need to declare my inventory and update it? Many policies require declared values, and if you don't update before peak season, they pay out on the old figure.
What you can do beyond the policy
Insurance compensates a loss; it doesn't prevent one, and it never compensates the sales you didn't make while restocking. What actually reduces risk is duller:
- Cycle counts instead of a single annual count: variances surface while they can still be traced. We cover it in inventory control.
- Unit-level traceability: knowing who touched what and when turns a mystery shortage into a dated event.
- Not concentrating all inventory in one location if your volume justifies it — full analysis in one hub vs. multiple warehouses.
- Reviewing declared values before peak season, not after.
Frequently asked questions
Can I insure my goods myself even though they sit in a third party's warehouse? Yes. It's common practice and sometimes the better route, especially for high-value inventory. Tell your operator to avoid duplicate coverage.
Does insurance cover my product while in transit? Usually not: storage and transport are separate coverages. Transit is typically covered by the carrier with its own limits, which are almost always low.
What if my inventory grows mid-year? Update the declared values. It's the most forgotten step and the most expensive one.
None of these questions are awkward, and a serious operator answers them with documents rather than "yes, of course, it's all insured." If you're evaluating where to store your inventory and want to review these conditions against real numbers, tell us about your storage needs and we'll go through it with you before a single box moves.