A growing headache: New Zealand's worsening materials shortage forces builders to stockpile, attracting thieves. How can they reduce the risks?

With suppliers running out of stock and deliveries delayed,

more and more builders are being forced to stockpile building materials.

  

Today, we have invited Builtin insurance company's Mr Ben Rickard to discuss stock insurance and explain how to get better value when insuring your stock. 

Recently, Ben drove around the lower North Island and spoke with builders along the way. Almost everyone mentioned problems caused by building material shortages, including suppliers running out of stock, long delivery times and rising costs.

For these reasons, some builders are considering stockpiling, while others have already started. That way, even if suppliers run out, they will at least have some stock on hand to keep projects moving.

But does this really cover every eventuality? Stockpiled building materials face not only familiar hazards such as flooding and fire, but also the risk of theft. With materials in short supply and prices rising every few weeks, more and more thieves are eyeing an opportunity.

The value of your stock on hand could rise rapidly. To be properly prepared, you need to ensure it is covered by insurance.

If the materials are intended for a particular project, they may be covered by the contract works insurance extension for “off-site storage (offsite storage）”, but bear in mind that claims are subject to a limit and the materials must be used for that project.

If the building materials you purchase are intended for more than this particular project, it is best to ensure they are covered by your commercial property policy (material damage policy）. You may already have a policy covering tools and equipment, and stock insurance can usually be added to it.

These policies usually apply nationwide. Provided your stock is in New Zealand, it is covered whether at your home, in a warehouse or garage, on a building site or in a vehicle, although restrictions may apply in some circumstances. Consider increasing your cover to reflect the value of your stock.

If you own the property where the stock is stored, you can amend the policy for the relevant building to include stock cover. Check the stock insurance limit in your existing policy and increase it if necessary. Some policies restrict where stock can be kept, meaning it is covered only when stored at an agreed address. If you need to transport or relocate your stock, you must notify your insurer.

 

A key reminder: keep an asset register!

In February this year, a builder's vehicle was broken into and tools were stolen. Unfortunately, the builder could not prove ownership of several major tools, delaying the claim. Only after considerable argument and finally finding some photographs of the tools did they receive payment.

This case is a timely reminder that proof of ownership helps claims proceed quickly. Evidence can include an asset register, such as a spreadsheet or app recording tool details, receipts and invoices, or photographs. Ideally, record each asset's details, serial number, purchase date and purchase price. The same applies to stockpiled materials.

 

To sum up

Building materials and tools face an ongoing risk of theft, damage or loss. Claims data shows that the risk of building material theft has recently increased further.

Check whether the off-site storage limit under your contract works insurance is sufficient. If you have building insurance, see whether stock and materials can be added to the policy. Also check whether the policy imposes conditions on where materials and tools are stored, and establish whether cover applies only at a specified location or wherever they are kept. 

 

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