As the global economy expands, businesses face increasing risks related to the transportation and storage of goods between factories and final destinations. Traditionally, freight forwarders insured goods traveling overseas, while local insurers provided coverage for domestic cargo. However, this arrangement often led to coverage gaps during the loading and unloading process.
What is a Stock Throughput Policy (STP)?
To address these gaps, insurers in the 1970s developed Stock Throughput Policies (STP). An STP policy provides end-to-end coverage for a company’s cargo, protecting goods on land and at sea, ensuring seamless protection throughout the supply chain.
Key Features of a Stock Throughput Policy
STP policies offer several advantages that make them a valuable choice for businesses handling large inventories and frequent shipments:
- Elimination of Coverage Gaps – Coverage begins when the insured assumes an interest in the goods and ends only when that interest ceases, even if the goods are in a third party’s possession.
- No Time Limitations – Coverage remains in effect as long as the insured has financial exposure, whether the goods are in transit or storage.
- Competitive Rating Structure – Low deductibles for stored goods, even in earthquake and windstorm-prone areas.
- High Liability Limits – Coverage limits can exceed $100 million per location, offering robust financial protection.
- Comprehensive Catastrophic Coverage – Protects against perils that might otherwise be subject to sublimits in standard property policies.
- Protection Regardless of Sale Terms – Coverage remains valid as long as the insured has a financial stake in the goods at the time of loss.
- Cost Management Benefits – Offers flexible distribution channels, which help manage premium expenses and provide greater supply chain control.
Who Can Benefit from an STP Policy?
Any industry with significant inventory and transit exposure can benefit from an STP policy, including:
- Manufacturers
- Distributors
- Retailers
- Importers and Exporters
Is an STP Policy Right for Your Business?
If your company handles large volumes of goods in transit or storage, an STP policy can provide valuable protection. To explore your options and determine the best coverage for your needs, contact our experienced team today.
We are here to answer your insurance and risk management questions. We look forward to assisting you!
