Hello friend Liga Asuransi The fashion industry in Indonesia is a sector that never lacks interest. From exclusive boutiques and youth-focused clothing stores to online fashion stores, everything thrives on trends. Consumers are constantly seeking new clothes, shoes, bags, and accessories to complement their lifestyles. It’s no wonder the fashion industry is a gold mine for entrepreneurs.
However, behind these great opportunities, there are risks that are often overlooked: stock of clothing and accessories are the lifeblood of the fashion business. Without stock, a store cannot operate. The problem is, this valuable inventory is highly susceptible to loss, damage, or even destruction due to disaster.
Imagine a boutique warehouse with Rp2 billion worth of stock. It could be destroyed overnight by fire, flood, or theft. Without protection, the owner would have to bear the full cost of the loss. Here’s why clothing stock insurance has become an important solution for fashion and retail businesses.
This article will discuss the risks in the fashion business, the relevant types of insurance, the benefits that can be obtained, and how L&G Insurance Broker can be the best partner to protect your business.
Why Does Clothing & Accessories Stock Need Protection?
Clothing and accessories inventory isn’t just merchandise. For fashion store owners, every piece of clothing, shoe, or bag is an investment that must be safeguarded. The value can reach millions to billions of rupiah, depending on the scale of the business.
Some reasons why fashion stocks really need protection:
- High scores: One small warehouse can contain thousands of units of goods with fantastic value.
- Risks easily occur: Clothes are easily damaged by water, fire, mold, or mishandling.
- Crime target: Fashion retail is often targeted by thieves because the items are easy to resell.
- Business can stop: Without stock, shop operations immediately come to a standstill.
A real-life example: a fashion store in Bandung lost Rp 500 million worth of stock due to flash floods. Without insurance, it took the owner over a year to recover, and some branches were even forced to close.
Risks That Threaten the Fashion Retail Business
Fashion business risks can be divided into two broad categories: internal And external.
Internal Risk
- Human error: Mishandling of items, such as storing them in a damp place, can cause clothes to become moldy.
- Electrical short circuit: Warehouses are often filled with iron shelves and lights, if there is a short circuit, a fire can easily occur.
- Logistics errors: Wrong item sent, item lost in transit, or stock not recorded correctly.
External Risks
- Natural disasters: Floods, earthquakes, and forest fires can destroy stocks in an instant.
- Theft and robbery: Warehouses or shops can be broken into, especially those in vulnerable locations.
- Operational disruption: Demonstrations, riots, or other social events can make shops unable to operate.
The impact? Without insurance, the owner must bear all losses. For example, a shop with a monthly turnover of Rp 200 million could collapse immediately if Rp 1 billion worth of stock is lost. With insurance, this burden can be shifted, allowing the business to continue operating.
Types of Insurance Needed by Fashion & Retail Stores
1. Commercial Property Insurance
Protection for shops, boutiques, and warehouses. Covers losses due to fire, flood, earthquake, explosion, or riot. This policy typically covers the building and its contents, including clothing and accessories.
2. Burglary Insurance
Protects against losses due to violent theft or burglary. This is particularly relevant for fashion stores, as clothing, bags, and shoes are easily resold, making them vulnerable to thieves.
3. Marine Cargo Insurance
If your business involves distributing stock from a factory to a warehouse, or from a warehouse to a reseller, the risk of damage during transit is significant. Marine Cargo Insurance ensures goods remain protected, whether traveling by land, sea, or air.
4. Business Interruption Insurance
Disasters not only damage goods but also disrupt operations. If a store must temporarily close, this insurance helps cover fixed costs, such as employee salaries and rent, until business recovers.
5. Third Party Liability Insurance (Public Liability)
If a store fire spreads to a neighboring building, the owner could be sued. A liability policy helps cover third-party claims, preventing the business from being burdened further.
Tips for Choosing the Right Clothing Stock Insurance
Many business owners are confused about choosing the right insurance. Here are some simple tips:
- Calculate stock value accurately: Don’t underestimate the value of items in your warehouse. Make sure your policy covers the actual value.
- Note the additional clause: For example, special protection for floods or earthquakes.
- Adjust to business scale: A small shop might be sufficient with burglary insurance, while a large retailer would need a complete package.
- Compare some policies: Don’t just choose, check the benefits and premiums offered.
- Consult with an insurance broker: The broker will help analyze the risk so that the police choice is more accurate.
Common Mistakes Fashion Store Owners Make About Insurance
- Assuming small stocks do not need to be covered: Even losing Rp. 50 million could be a big blow to a new business.
- Buy the police as is: Many people buy property insurance without realizing that stock is not automatically covered.
- No update of insurance value: Stock can increase over time. If the policy is not renewed, the claim may be less than the value of the loss.
- Handling claims yourself: Many people are overwhelmed when it comes to claims because the process is complicated. However, brokers can help.
How to Calculate the Insured Value of Clothing Stock
To ensure your policy is properly targeted, it’s important to calculate the coverage value. Here’s how:
- Inventory of goods: Record the number of stocks per category (clothes, shoes, bags, accessories).
- Use the capital price (cost): Don’t just count the selling price.
- Update regularly: At least once every 6 months to adjust stock.
- Enter policies: Adjust the insurance value to the total inventory.
This way, you avoid underinsurance (the insured value is lower than the actual stock).
Benefits of Insurance for Fashion Business
- Financial protection: Avoid major losses that could destroy business capital.
- Feeling safe: Owners can focus on developing their business without worrying too much about risks.
- Business continuity: Business can still run even if a disaster occurs.
- Increase trust: Investors, partners, and even banks have more confidence in businesses that are protected by insurance.
Why Do You Need an Insurance Broker?
Purchasing insurance directly from the company is possible, but the risks are high if you don’t understand the policy details. Insurance brokers play a vital role:
- Analyze the risks according to your fashion business conditions.
- Provide appropriate policy recommendations.
- Negotiate the best premium.
- Assisting with the claims process until completion.
Why Choose L&G Insurance Broker?
As a trusted insurance broker in Indonesia,L&G Insurance Brokers has decades of experience serving various industries.
Advantages of L&G:
- Business specialist: Understand the needs of fashion stores, retail, and distribution.
- Wide network: Cooperate with many national & international insurance companies.
- Full support: From initial risk analysis to claim disbursement.
- Free consultation: Help business owners understand the risks before purchasing a policy.
With L&G, you don’t have to worry about insurance details. Simply focus on growing your fashion brand, and we’ll protect your inventory.
Cover
The fashion business is indeed promising, but it’s also fraught with risks. Valuable clothing and accessories are highly vulnerable to fire, flood, theft, or damage during transit. Without protection, a single disaster could derail a business you’ve spent years building.
Therefore, having clothing stock insurance is a wise step to protect your business. Don’t wait until disaster strikes to regret it. Consult your protection needs immediately with L&G Insurance Broker, a trusted partner ready to accompany your fashion business journey.
Free consultation now via WhatsApp at 08118507773 or email to halo@lngrisk.co.id L&G’s team of experts is ready to help you find the best protection solution for your fashion and retail business.
