A stock throughput policy (STP) is a marine cargo policy designed for companies that import, distribute, or export merchandise. The policy provides cover for all moveable goods (including inventory), as well as raw materials, semi-finished, and finished products.
The goods are covered at all times, whether in transit, undergoing process (although damage caused by the manufacturing process is excluded), or in storage at owned or third-party premises. It often includes options to extend coverage to retail locations (retail stock throughput).
Benefits of an STP
- Protection: Insurance under a single STP is designed to cover all raw materials, other stocks, and finished products or commodities, whether in transit, storage, or otherwise.
- Limits: Limits apply to all perils on a “per-location” basis, allowing for a relatively low limit to provide a significant amount of property coverage. Similar to traditional property placements, major catastrophic perils such as flood, windstorm, and earthquake are typically subject to separate annual aggregate sublimits. However, aggregate CAT limits may be tailored to include separate limits for the three major perils of earthquake, windstorm, and flood, or may be extended to include additional aggregate limits as needed or desired.
- Deductibles: Lower nominal flat dollar deductibles, rather than percentage deductibles, are often achievable.
- Coverage: Coverage is designed to allow for consistent insuring conditions and a flexible approach to self-insured retention.
- Flexibility: The marine cargo insurance market is known for its ability to manuscript wording without significant regulation, thus allowing some of the more complex or less standard risks to be incorporated into the already broad cargo policy form.
- Premium: A single rate is applied to sales to create a simplified program from cradle to grave.