Peak Season Endorsement – you bought it…but can you claim it?

One of the insurance products available to business owners is a peak season endorsement – usually on inventory. The peak season endorsement allows for an automatic increase of the insured value as stated on the declaration page (e.g. 25% over the amount insured). For example, a company with inventory insurance of $500,000 may be eligible for an increase up to $625,000 if there is a 25% peak season endorsement. This type of insurance is useful for companies that have seasonal operations and carry higher inventory at certain times of the year. Rather than carrying inventory insurance at its highest value throughout the entire year, a company can purchase a peak season endorsement as part of its insurance package.

We have come across several instances where the insured thought they had this peak season coverage in place but had not paid enough attention to the fine print. Some policies require that you carry insurance that equals the average monthly value of whatever is being insured (e.g. inventory) for the 12 months prior to the policy date before the peak season endorsement is available. Basically, the insured must have coverage in place for an inventory value that is equal to (or greater than) the company’s average annual monthly balances. It is worth reviewing your insurance policy wording as well as your monthly financial statements to ensure you have the appropriate level of coverage should an incident occur. You don’t want to find out that the peak season coverage is not applicable – particularly if you experience an event such as a fire at the height of your busiest season.