How to Insure Your Business Stock and Inventory in Nigeria

Why Stock Insurance Matters More Than Ever

If you run a shop, a small manufacturing setup or even a side business stocked out of your home, your inventory is probably your biggest working asset. A market fire, a burst pipe during the rains, or an armed robbery can wipe out months of stock in one night. With replacement costs rising steadily, especially for imported goods, the naira value of your stock today can be very different from what you paid for it. Many small business owners find out too late that their cover, if they had any, was based on old figures.

Stock insurance protects the goods you hold for sale or use in production, whether that is provisions in a supermarket, fabric in a boutique, spare parts in a workshop, or raw materials waiting to become finished products.

What Counts as Business Stock

Stock and inventory cover typically includes:

• Finished goods ready for sale
• Raw materials and work in progress
• Packaging materials
• Goods held on consignment, where agreed with the underwriter
• Stock in transit between your store and a warehouse, if you add that extra

It does not usually cover cash, which needs separate money cover, or the shop fittings and equipment, which fall under contents or business asset cover. If you are running a full shop setup, it is worth reading about /resources/business-insurance-for-smes-in-nigeria to see how these pieces fit together.

Getting the Value Right

The biggest mistake business owners make is under-declaring stock value to save on premium. This backfires badly because of the average clause: if you insure stock for half its true value and suffer a partial loss, the payout is cut in the same proportion, not paid in full.

A better approach:

• Value stock at replacement cost, what it would cost to restock today, not what you originally paid
• Update the figure regularly, especially if you import goods or your prices have moved with the exchange rate
• If your stock levels change with seasons, such as more inventory before festive periods, consider a declaration-based policy that lets you adjust cover through the year
• Keep supplier invoices, delivery notes and stock records, since these are what prove value at claim time

Cova can help you work through a fair current value rather than guessing, and update it whenever your stock levels shift.

Common Risks Covered

A solid stock policy usually protects against:

• Fire, including from generators, faulty wiring or nearby market fires that spread
• Theft and burglary, particularly break-ins after hours
• Flood and water damage, common in the rainy season for ground floor shops and warehouses
• Impact and accidental damage, such as a vehicle hitting your shopfront

Some of these come bundled as all-risks cover, others are listed perils only, so it is worth checking exactly what is included before you assume you are covered for everything.

Keeping Proof for a Smooth Claim

When a loss happens, the underwriter will want to see that the stock existed and was worth what you claimed. Good habits to build now:

• Keep a running stock list with quantities and values, updated monthly if possible
• Photograph shelves and storage areas periodically, not just after a loss
• Retain purchase receipts and supplier invoices in a folder or scanned copies
• For theft, get a police report as soon as possible, since most underwriters require one before they process a theft claim
• Note serial numbers or batch numbers for higher value items where applicable

Logging this information in a vault before anything happens saves enormous stress later, when you are trying to reconstruct records from memory during a crisis.

Practical Steps to Insure Your Stock

1. List out categories of stock you hold and estimate current replacement value for each
2. Decide if you need a fixed sum insured or a declaration policy that flexes with stock levels
3. Add stock-in-transit cover if you move goods between locations often
4. Check the excess, since a lower excess raises your premium but reduces what you pay out of pocket on smaller claims
5. Review and adjust your figures every few months, particularly after major stock purchases

Start With a Vault, Insure When Ready

You do not need to have everything figured out before you start. Log your stock categories and rough values in a vault today, it is free and takes a few minutes. When you are ready to add cover, Cova can walk you through the right structure for your business and quote your exact figures with a licensed underwriter carrying the risk. There is also a 14-day cooling-off period if you change your mind after taking cover, with a pro-rata refund.