An insurance report updating the inventory of an insured business. Over time, the value of items such as equipment, furniture, and improvements fluctuates. Value fluctuations are captured and reported during the policy year.
Details of a Reporting Form
A reporting form is also known as a value reporting form. It is a vital document that businesses with fluctuations in inventory complete and submit to an insurance company. The details of a reporting form may vary from one business to another. However, the primary purpose of this document is to ensure that a business receives the right insurance coverage amount.
Businesses may have fluctuating inventories whose value changes thanks to prevailing market conditions. These conditions include supply and demand, cost of raw materials, depreciation of equipment, and so on. A business should fill out a reporting form periodically during the policy period to show the current value of inventory, machinery, and equipment at hand.
A reporting form is critical for both insurers and businesses. It helps to ensure that the business isn’t overinsured or underinsured. It does this by providing accurate data to help the insurer charge the correct premiums according to the current value of the inventory. In this case, the reporting form is also referred to as a stock reporting form.
Example of a Reporting Form
A bakery business is one such business that needs to fill and submit a reporting form periodically throughout the year. When an entrepreneur starts a bakery, they may begin with one dough mixer and a single commercial oven.
In addition, their inventory could include 100 lbs of wheat flour and a host of various ingredients. Since a bakery is vulnerable to fires, the owner is required by law to take out insurance to safeguard his business in the case of such an event.
As the business continues to grow, its inventory increases with more equipment added to the existing ones. The amount of flour and ingredients is also bound to increase or decrease. This is dependent on customer demand. All these variables inform the data that is filled into the reporting form and submitted to the insurance company for correct valuation.
Significance of a Reporting Form
A business must have adequate insurance to cover any hazards that may occur. This is especially true for businesses that experience wide value fluctuations in the course of a policy period.
The importance of a reporting form to a business can be broken down into the following points;
- A reporting form gives the correct value of a business that has irregular inventory when filled periodically.
- A company that provides regular reporting forms avoids the risk that comes with being overinsured or underinsured.
- Regardless of fluctuating demand, supply, and other market conditions, a reporting form gives an accurate picture of the business’s value if filled out regularly.
- Premiums are lower for businesses that submit regular reporting forms to their insurance companies.
- A business can set limits for the premiums they can pay based on their reporting forms audit.