Warehouse insurance protects goods stored in a warehouse against risks such as fire, lightning, explosion, earthquake, flood and inundation, storm, theft and malicious acts; dropping and breakage during handling are added through extended cover. The goods owner's stock insurance and the warehouse operator's liability insurance are separate policies and do not replace each other.
Who insures what in a warehouse?
"Warehouse insurance" is not the name of a single policy; there are three different insurable interests in the same warehouse and each is insured separately.
| Policy | Insured | What it pays |
|---|---|---|
| Building insurance | Owner of the warehouse building | Damage to the building, racking system and fixed installations |
| Goods (stock) insurance | Owner of the goods | Loss of or damage to goods in the warehouse; no fault required |
| Warehouse keeper's liability insurance | Company operating the warehouse | Damage the warehouse keeper causes to customer goods through its own fault |
For the goods owner, the most important distinction is between the second and third rows. The legal answer to who is responsible in a warehouse is explained in Who is liable for goods in a warehouse.
Which risks can be covered?
- Main cover: Under the General Conditions of Fire Insurance (Yangın Sigortası Genel Şartları), fire, lightning, explosion and resulting smoke, steam and heat damage.
- Natural catastrophe extensions: Earthquake and volcanic eruption, flood and inundation, storm, snow load, landslide.
- Water and impact: Internal water (pipe bursts, sprinkler leakage), impact by land vehicles and aircraft.
- Social events: Strikes, lockouts, riots, civil commotion, malicious acts and terrorism.
- Theft: Under the General Conditions of Theft Insurance (Hırsızlık Sigortası Genel Şartları), theft by breaking in, forcing, climbing, using false keys or threats. Losses that leave no trace and inventory discrepancies are generally excluded.
- Handling damage: Falls from a forklift, rack collapse, crushing during stacking; often covered through an "all risks" goods policy or a special clause.
- Cold stores: Spoilage caused by breakdown of the refrigeration machinery is a separate cover.
How is a fluctuating stock value declared?
Warehouse stock does not stay constant during the year; for seasonal products the difference between the lowest and highest month can be several-fold. There are three common methods:
- Fixed sum insured: Insurance based on the highest stock value of the year. Simple, but excess premium is paid in low-stock months.
- Declaration basis: A maximum sum insured and a deposit premium are set at the start of the year, the insured reports the stock value every month, and the final premium is calculated at the end of the period based on the average.
- Seasonal increase: The sum insured is raised for certain months by endorsement.
If the declared value is below the actual value, the underinsurance rule applies and the claim is paid proportionally. For example, if €1,000,000 of stock is insured for €600,000, a €200,000 loss is paid at €120,000.
Why is the warehouse keeper's insurance not enough?
The warehouse keeper's liability policy pays only if the warehouse keeper is at fault, and the cargo owner must prove that fault. In events where the warehouse keeper is not at fault, such as an earthquake, flood or fire spreading from a nearby facility, this policy does not respond. In addition, limits are often capped in the contract at low amounts per kilogram or per event. The way to protect the full value of the goods is the goods owner's own stock insurance. How to write this point into the contract is covered in warehousing contract.
Customs bonded warehouses carry an additional risk: if goods are lost, the suspended import duties also come into play. This is discussed in the scope of bonded warehouse insurance.
Checklist when taking out a policy
- Have the warehouse address, construction type and fire detection and suppression systems been declared correctly?
- Is the stock valued at cost price or selling price, and which one does the policy use?
- Are the earthquake and flood extensions and their deductible rates stated in writing?
- Are goods at other addresses and in transit covered? For the transport leg, all risks cargo insurance is needed separately.
Stock cover and policy structure are also explained on the warehouse insurance page.