What is a 'Value Reporting Form'

The Value Reporting Form is an insurance report used to provide the information necessary for a variable coverage amounts needed by a business which holds irregular inventories throughout the year. The irregular inventory may be differences in the quantity, quality, specific items held. The Value Reporting Form periodically reports the values of this shifting stock to the insurance provider. The insurer, in turn, adjusts the amount of coverage to reflect the value of the current inventory. Using a value reporting form can help the company avoid being over- or underinsured. You may also see this form under the name of a Stock Reporting Form.

BREAKING DOWN 'Value Reporting Form'

It is critical for a company to maintain adequate insurance to cover hazards, and the Value Reporting Form is an essential tool in determining the proper commercial property insurance levels. Some business commerce requires a company to have inventories that vary significantly throughout the year depending on seasonal factors, consumer needs, and fluctuations in supply and demand.

From retailers to manufacturers, this cyclic ebb and flow of merchandise and commodities require regular oversight and monitoring. Most of the insurance industry uses the standardized Insurance Services Office (ISO) form number CP13-10 for reporting, but there are other forms in use. Business should make sure they work with an insurance agent or broker who is familiar with the unique requirements necessary when using a value reporting method.

Options for Reporting Inventory Value

When it comes to obtaining insurance to cover shifting inventory,  a company has several options.

They may purchase coverage which will include the historically highest or lowest level of stock. On one side of this method, the business is over-insured and spending capital where it is not needed. On the opposite side, the company is putting itself at grave risk if any of many hazards should befall them. The company may split-the-difference between highs and lows and buy property insurance for the average amount of inventory but are once again gambling they are on the right side of any possible loss.

Businesses may also use limit endorsements which allows changes to the policy throughout the term period, but will also impact the premium. However, endorsements are problematic in that the business must foresee dates and inventory levels, which still leaves the company open to risk.

The Value Reporting Form give companies yet another choice in setting limits for insurance. Premiums will usually be lower when using the value reporting method. However, this method requires dedication to avoid penalties from misreporting. Assessment of substantial penalties may happen for incorrectly filed forms when a business later claims for a covered hazard. The insurance provider may also apply sanctions for under- and over-reporting of property values.

Company Responsibilities with Value Reporting Forms

The company chooses how often it should complete the form. Value reporting submittal may happen daily, weekly, monthly, quarterly, or even by the policy term. Depending on the frequency chosen, there are mandatory dates that the full accounting must arrive at the insurer's office. A company will also decide what to include and how to include items on the reporting form. However, a full and accurate accounting of costs for the reported stock is a requirement. 

Some businesses will use the Value Reporting Form for inventory and use a separate property insurance coverage for items such as computers, desk, equipment, and other business property which remain relatively static throughout the year. In this way, companies can maintain an appropriate level of coverage by adjusting each month's or each quarter's insurance needs based on current inventories.

Value Reporting Forms must bear the signature of an authorized company officer or designated employee. The company will need to identify any betterment and improvement of the location as well as new locations, added since the last reporting period.

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