Insurance

This is a subject of great importance to all those who store wine with a third party warehousing company. It is a specialist subject much misunderstood and with pitfalls along the way!
For all wine owners, it must be a prime objective to ensure that their investment or stock is fully insured against all risks.

As tax warehouse keepers we are not registered with the FCA to undertake insurance mediation activities and therefore may not give advice on insurance. We can however direct customers to those who can give such advice and point out some of the issues that we believe customers should be aware of.

Some tax warehouse keepers (TWK) advise wine owners that all wine entrusted to the TWK is insured to full replacement cost, however this usually means that the TWK’s insurance cover is available to owners only where the TWK is legally liable for the loss or damage. Legally liable is where the TWK has been negligent in some way and this has directly caused the loss or damage to occur. This means that unless liability can be attributed to the TWK, no cover is available to owners.

Other potential problems of relying on a third party (the TWK) to insure those assets include the following:

• Owner’s interest is not or inadequately noted on the policy.
• There may be exclusions or limitations on the policy which owners may not be aware of. For instance, it is not unusual for a claim to be voided if loss can be identified to employees or directors of a company.
• Owners may not be made aware of any alterations to the terms of a policy.
• Owners are reliant on the warehouse keeper paying the premiums.
• The TWK’s policy may not have sufficient level of cover. On one of our competitor’s website they detail the value of stock they hold and then state that they have cover for 25% of that overall value. Is their customer therefore prepared to write off 75% of the value of their holding if a catastrophic loss occurred at the warehouse? Indeed, is it clear to those customers that this is what it means?

Are they able to obtain a copy of the insurance policy and the warehouse keeper’s Terms & Conditions? Do the customers fully understand the documents? This is one of the reasons that we believe that they require expert advice from an insurance broker who can ensure that a policy covers precisely what they require to be covered, as opposed to hoping that the term “All Risks” covers everything – it will not!

At one time LCB did offer such insurance on all wine stored with them, but being aware of the issues mentioned above, embarked on lengthy consultation with the insurance industry. Part of the brief being that the customer should have true “All risks” cover with minimum hassle. The clear advice was that customers were substantially more secure with insurance policies in their own names.

This led to LCB working with the insurance industry to design flexible tailor-made policies through specialist insurance brokers. These policies are cost-effective, flexible and controlled by owners themselves with the expertise of the brokers we trust.

The cost of insurance is inevitably passed on to the customer in one form or another. In addition to enhanced security, LCB believes that customers with a policy in their own name achieve a net saving. As an example, as customers have control over their policy and sums insured, they can adjust their levels of cover, on a month by month basis if so required, to take account of such things as seasonality or en primeur shipments. It is simple to ascertain that those warehouse keepers offering inclusive insurance have substantially higher warehousing charges than LCB.

It is therefore important to note that LCB does not insure goods deposited with it beyond the nominal liability detailed in its Terms & Conditions. Goods are stored under the current terms and conditions of the UKWA for warehousing and carried under the RHA Conditions of Carriage for deliveries.

Read these Terms & Conditions in full.