As Eid al-Fitr approaches, warehouse activity in Indonesia reaches its peak. The recent real-life incident of a warehouse fire, which resulted in losses of up to Rp 17 billion, serves as a stark reminder that a surge in inventory without proper risk management is a financial time bomb. When inventory insurance isn’t managed precisely, business owners face the risk of losing their working capital overnight.
Relying on a standard policy without the extension of property all-risk insurance often creates a fatal flaw, resulting in rejected claims or insufficient replacement value. L&G Insurance Broker is here as a risk management partner, ensuring every inch of your assets is protected, from physical risk audits to aggressive claims assistance. Given the significant investment value you’re risking this Eid season, securing competitive and comprehensive protection is the smartest business move you can take now. Contact L&G Insurance Broker now at 08118507773 for a consultation with our experts.
The “Full Warehouse” Phenomenon Ahead of Eid and the Risks That Lurk
Eid al-Fitr is not just a religious celebration, but also the peak of the economic cycle in Indonesia. Businesses, from retail, food and beverage, to e-commerce, accumulate massive amounts of inventory. Often, warehouse capacity is stretched to its maximum limit to meet surging market demand.
However, behind these piles of goods worth billions, there’s a drastically increased risk of fire. Excessive electrical loads from air conditioning systems or automated transport vehicles, as well as the accumulation of goods that block access to fire extinguishers, are often the primary triggers. In the case of a logistics warehouse fire that caused losses of up to Rp 17 billion, it was revealed that the speed at which the fire consumed inventory was outweighed by the physical protection measures in place. Without robust property insurance coverage, such losses could permanently halt a company’s operations.
Why is Inventory Insurance Different During Peak Season?
Many entrepreneurs make the mistake of insuring their inventory based on the average annual value. However, during the lead-up to Eid al-Fitr, the insured value of warehouse inventory can increase by 300% to 500% compared to a normal month. If a fire occurs while your inventory is full and your insurance coverage is still at the old value, you will be subject to an under-insurance penalty.
In insurance, the average clause applies. If you only insure 50% of the value of the goods actually in the warehouse at the time of the disaster, the insurance company will only pay 50% of your losses. To avoid this, the use of a Stock Declaration Clause is highly recommended, where premiums are calculated based on accurate monthly stock reports, providing flexibility when stocks are high or low.
Property All Risk Insurance vs. Standard Fire Policy
- For assets worth billions, such as Rp17 billion in stock, using a standard fire policy (PSAKI) alone is extremely risky. You need property all-risk insurance (PAR). The difference is fundamental:
- Standard Policy: Only covers the specifically mentioned risks (Fire, Lightning, Explosion, Aircraft Crash, and Smoke).
- Property All Risk Insurance: Covers all sudden and unexpected physical damage, except those specifically excluded in the policy. This includes water damage (leaking sprinklers), theft with burglary, and damage from heavy equipment accidents in the warehouse.
Understanding the technical intricacies behind each clause in a property insurance policy is key to ensuring your investment is not wasted when disaster strikes. Given that each type of commodity has different risk characteristics, such as textiles being susceptible to smoke or electronics being susceptible to humidity, policy preparation should be carried out by a broker who understands the risk anatomy of your industry. To ensure your business remains financially sound after a major fire, assistance from a risk management consultant skilled in policy negotiation is essential.
The Importance of Accurate Warehouse Inventory Insurance
Warehouse inventory insurance covers raw materials, work-in-progress, and finished goods. During Eid al-Fitr, goods move rapidly. Mistakes in recording or reporting asset values to insurance companies can have dire consequences.
L&G Insurance Broker helps you develop a dynamic reporting strategy. We ensure that coverage extensions cover debris removal costs, as cleaning up a Rp17 billion stock fire can cost hundreds of millions of rupiah, which is often not covered by standard coverage unless negotiated upfront.
L&G Insurance Broker: Not Just a Policy Seller
Amidst the intense competition in the insurance industry, L&G Insurance Broker positions itself as a Risk Management Partner. We understand that entrepreneurs don’t need a “paper policy,” but rather “certainty of claims payment.”
Our Advantages as Your Partner:
- Risk Analysis & Physical Audit: We help identify weak points in your warehouse before a fire occurs, helping to reduce potential risks which also results in more competitive premium rates.
- Competitive Policy Extensions: We have access to a wide range of Tier-1 insurance companies. We negotiate the best premium rates with the broadest coverage extensions, ensuring there are no legal loopholes that could harm you.
- Claims Advocacy: This is our strongest value. When disaster strikes, the L&G claims team will be there to assist you in your dealings with the Loss Adjuster. We will argue the technical and legal issues to ensure your rights are paid in full, quickly, and fairly.
Other Risk Management Recommendations for Entrepreneurs
In addition to physical protection of buildings and stock, L&G recommends the following insurance instruments to cover the 360-degree risk gap:
- Business Interruption Insurance: A warehouse fire not only destroys inventory but also halts sales. This insurance covers lost net profit and fixed costs (such as employee salaries) while your business is out of business after the disaster.
- Marine Cargo Insurance: Protects your stock while it is in transit from the factory or port to the warehouse, especially when shipping volumes increase sharply ahead of Eid.
- Public Liability Insurance: Covers third-party lawsuits if a fire in your warehouse spreads to a neighboring warehouse or injures someone else.
The uncertainty of natural disasters or technical failures during busy seasons like Eid requires thorough financial preparedness. In a competitive market that demands speed of distribution, the risk of stock loss poses a real threat to your company’s credibility and working capital. To achieve the most efficient protection design while still covering all the details of your inventory risks, the best approach is to consult with a team specialized in corporate risk management.
Physical Mitigation Steps to Reduce Fire Risk
L&G Insurance Broker also educates clients about physical steps that can reduce the warehouse risk profile:
- Electrical Installation Audit: Ensure that the electrical panel is not overloaded due to the use of electric forklifts or additional lighting systems for Eid overtime operations.
- Stacking Management: Provide distance between goods and warehouse lights to prevent excessive heat that can trigger fires.
- Sensitive Smoke Detection System: Install an alarm connected to 24-hour security personnel for a quick response in the first minute of a fire.
These mitigation measures will help us as brokers in negotiating premium discounts with insurance companies because your warehouse is considered a well-managed risk.
Conclusion
The Rp17 billion stock fire incident is a valuable lesson that maximum protection is essential. As Eid approaches, when all eyes are on profits, don’t neglect your business’s defenses. Through the right property all-risk insurance strategy, accurate warehouse inventory management, and partnerships with reliable brokers, you are building long-term business resilience.
L&G Insurance Broker is committed to supporting you every step of the way, from selecting a policy to ensuring your claim is processed smoothly. Make this year’s Eid a moment of triumph for your business, without the fear of unprotected fire risks.Contact L&G Insurance Broker now at 08118507773 to get the best risk management design, competitive premiums, and comprehensive claims assistance before the peak Eid season arrives.
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DON’T WASTE YOUR TIME AND SECURE YOUR FINANCES AND BUSINESS WITH THE RIGHT INSURANCE.
HOTLINE L&G 24 JAM: 0811-8507-773 (PHONE – WHATSAPP – SMS)
Website: lngrisk.co.id
Email: halo@lngrisk.co.id
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