With summertime around the corner, many businesses are on the brink of an influx in consumer demand, particularly hardware stores, material dealers, contractors, and manufacturing operators. After a dreary winter (that felt especially somber this year), people are itching to start on home improvement and construction projects. Those businesses are the first places they will turn.
If this is true for your business, get excited and start preparing! One great way of doing so is discussing a seasonal increase in BPP with your insurance agent. Let’s go over a few things about BPP so you know exactly how and why an increase in coverage is important.
BPP stands for Business Personal Property and refers to movable items owned by your business. This can include supplies, furniture, computers, equipment, and machinery ‒ basically everything except for the building itself. It is important to always track your BPP and inventory levels in order for your Commercial Property policy to adequately protect your business in the event of a loss.
Rather than offering a blanket policy limit to account for an influx in inventory, your insurance agent might offer you a seasonal increase in BPP (also referred to as “peak season endorsement”). This endorsement increases your BPP limit by a specified percentage (typically 25%) during your pre-determined busiest three months of the year. The increase takes effect automatically during these months, so all that you have to worry about is keeping up with client demand!
“For example, business typically picks up in the spring for retailers, especially hardware stores, as people are gearing up for fun in the sun and want to spruce up their backyards. To do so, they go to their local hardware store. With the increase in product demand, hardware stores know to have more inventory than normal on hand. If they don’t account for that additional inventory within their insurance limits and there is a loss, they won’t be compensated for the additional inventory lost. That’s where the seasonal increase in BPP comes into play.” (Terry Smith, NBIG Agent)
Let’s say you are the owner of a landscaping business in Pennsylvania. On average, you hold about $1,000,000 in BPP. Your business remains steady in the fall and winter, but, as you would expect considering the climate in Pennsylvania, your busiest season is spring. You work it out with your insurance agent to increase your BPP limits by 25% during spring months, putting you at $1,250,000. This increase means that if a loss occurs, you are adequately covered.
“The seasonal increase in BPP is designed for foreseeable or even unforeseen increases in BPP.” (Alex Howdeshell, NBIG Agent)
The benefit of adding the Peak Season Endorsement far exceeds the premium spent on it. This is especially true given today’s lumber market, with prices hitting an all-time high in the wake of COVID-19, the cost to replace inventory after a loss in mid-2021 will be substantially higher than it would have been in early 2020. The boost in coverage provides peace of mind to the policyholder, freeing them up to focus solely on providing an excellent shopping experience for their consumers.
Does it sound like your business could benefit from a seasonal increase in BPP coverage? Take action now before this year’s peak season passes. The first step is research and proper planning. Look back at business records from the past several years to confirm the months that make up your “peak season”. Go over your expenses to estimate the difference between your standard BPP levels compared to your “peak season” BPP amount. Then, get in touch with your insurance agent to endorse your policy. If you need help evaluating policies or are looking to switch things up, don’t hesitate to reach out to an NBIG insurance advisor today.
“Our endorsement provides an increased, albeit limited, amount to avoid the hole in coverage. Most store owners don’t realize the cost of fixtures, computers, servers, point of sale systems, security cameras, etc. So even when they are on the higher side of BPP limits and inventory, this endorsement helps bridge the gap on commonly confused BPP items.” (Brett Slama, NBIG Agent)
Want more tips on how to save money and better protect your business through insurance? Check out our eBook on how to create efficient loss control strategies and let us know what you think!