What it does
Under CP 00 10, only "stock" that has been sold but not yet delivered is valued at selling price. Other stock is valued at replacement cost or actual cash value, so a manufacturer whose unsold finished goods burn recovers production cost, not the built-in profit. CP 99 30 adds to the Valuation loss condition. Finished "stock" the insured manufactures is valued at its selling price as if no loss had occurred, less the discounts and expenses the insured would otherwise have had. It modifies CP 00 10, CP 00 18 and the Standard Property Policy.
Who needs it
Manufacturers with significant finished goods inventory, especially when the goods are already sold or sold quickly so that the lost profit cannot be made up later. That profit may not be recovered under business income because the plant may keep producing.
Quoting and selling notes
- Increase the stock limit to reflect selling price values. The coinsurance requirement will be measured on the higher valuation.
- Coordinate with business income so the same profit is not counted twice.
- For wholesalers and retailers that do not manufacture, market value valuation is handled by CP 99 31.
