Fidelity Guarantee - Missing Stock
Consider the following case study.
Loudest Car Stereos are wholesalers of car stereo equipment. Radios/CD players are easily transportable and saleable and considered high risk. Accordingly, they are kept in a locked, caged area in the warehouse.
At 30 June stock take all product lines are counted and checked to quantities in the computer records. A couple of minor variances were noted in the stock in the caged area and computer records amended. On 7 July, the dispatcher is on sick leave and the office clerk is obtaining stock from the caged area to fill an order. In doing so he bumps a stack of boxes which silently crash to the floor. On inspection it is discovered the boxes are empty.
Further investigations reveal a stock variation of $150,000 and that the dispatcher has a gambling problem.
The Chief Financial Officer is pleased a fidelity guarantee policy commenced on 1 July but in completing the claim form is unsure what the date of loss is, whether there is one loss or a series of losses, and what should be included in a "Proof of Loss Statement".
The CFO needs to identify the date of loss, check the current and any prior policy. The loss needs to be quantified over time and claimed under the appropriate policy.
If the losses are as a result of a series of related, continuous or repeated acts they may be treated as a single act.
Importantly a stock take variation alone may be insufficient proof to support the loss. Individual policies should be reviewed. Some may require "reasonable proof" and others a conviction.
Author
Published with permission of Claim Solutions Pty Ltd
Insurance Policy
Country: - Australia.
Policy Description: - Fidelity Guarantee.
Insurer: - Various.
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