Warehouse insurance in Singapore: stock, premises and liability
Warehouse insurance in Singapore: the 3 exposures
A warehouse operator holds 3 kinds of asset at risk, each owned by a different party and insured under a different contract.
| Exposure | Owner | Policy that responds |
|---|---|---|
| Building, mezzanine, racking, forklifts, sprinklers | The operator or the landlord | Commercial property (fire and allied perils) |
| Operator's own stock | The operator | Commercial property, stock section |
| Customers' goods in storage | The customer | Warehouse keepers' liability, or the customer's own policy |
| Revenue while closed | The operator | Business interruption |
| Injury to workers | The operator | Work injury compensation |
The common error is to assume the fire policy covers everything under the roof. It covers what the operator owns or is specifically declared to be responsible for. Customers' goods are covered only if the policy says so, and then only up to a stated limit per customer or per location.
The lease decides who insures the building. In most Singapore industrial leases the landlord insures the structure and the tenant insures fit-out, racking, plant and stock. The tenant's policy should name the landlord as an interested party where the lease requires it.
Stock declaration or fixed sum insured?
Stock in a warehouse moves. A fixed sum insured set in January is wrong by March. Two policy structures handle this.
A fixed sum insured policy sets one figure for the year. If stock exceeds it at the time of a fire, the average condition applies and the claim is reduced in proportion. A warehouse with S$3 million of stock insured for S$2 million recovers two-thirds of any partial loss.
A stock declaration policy sets a maximum limit, charges a deposit premium on a percentage of that limit, and asks the operator to declare actual stock values monthly or quarterly. At year end the premium is adjusted to the average declared value. The operator pays for the stock it held, not for the peak it feared.
| Feature | Fixed sum insured | Stock declaration |
|---|---|---|
| Suits | Stable stock, under 20% swing | Seasonal or growing stock |
| Premium | Fixed at inception | Deposit, adjusted on declarations |
| Under-insurance risk | High if stock grows | Low if declarations are made |
| Admin | None during the year | Monthly or quarterly declaration |
| Missed declaration | Not applicable | Insurer applies the last declaration or the limit |
A declaration policy fails only when declarations stop; the broker diarises them. Importers have a third option, a stock throughput policy, which follows the goods from the supplier's door through transit and storage to the customer.
Warehouse keepers' liability versus forwarder liability
An operator holding customers' goods is a bailee. It is liable for loss or damage caused by its negligence, and often, under its standard trading conditions, for a fixed amount per kilogram or per package. The policy that covers this is warehouse keepers' liability, sometimes written as bailees' liability.
Freight forwarders' liability is a different product. It covers a forwarder's liability for cargo in transit and for errors and omissions in documentation and customs. AIG's product page states that its appetite for logistics operators is for warehousing "incidental to transit and not a stand-alone warehousing operation". A company whose main business is storage, rather than moving goods, is outside that product and needs a keepers' liability policy written for storage.
Three terms set the value of a keepers' liability policy:
- The limit per customer, per location and in the aggregate.
- Whether cover follows the operator's trading conditions or full legal liability.
- Whether customers' goods are covered on a first-loss basis, so the operator does not have to insure the full value of every pallet.
Operators should also check the contract with each customer. A customer who requires the operator to insure its goods for full value needs a goods-in-trust extension on the property policy, with the customer's stock declared alongside the operator's own.
Fire safety conditions and how claims are decided
Fire is the loss that closes warehouses. SCDF recorded 2,050 fires in 2025, up 3%. Fires at non-residential premises rose 13.5% to 471, and electrical origin accounted for 43.5% of them. Property insurance claims across the Singapore market rose 60.5% in 2025, and property underwriting profit fell to S$1.1 million from S$41.7 million the year before. Insurers have responded with closer attention to fire conditions on warehouse risks.
A warehouse property policy carries warranties and conditions that are tested at claim time:
- Fire protection: sprinklers, hose reels and extinguishers maintained and tested as the policy states.
- Storage height: goods kept below the stated clearance from sprinkler heads.
- Hot works: a permit system for welding and cutting.
- Electrical: fixed wiring inspected on the stated cycle, no overloaded sockets or temporary wiring.
- Housekeeping: aisles clear, waste removed daily, no storage against electrical boards.
- Hazardous goods: declared and stored as the policy requires.
Where the premises are designated by SCDF, the operator must also hold a current Fire Certificate under the Fire Safety Act. An unapproved mezzanine, an extra floor of racking or a change of use that was never submitted to SCDF gives the insurer a material non-disclosure argument at claim time. The broker's pre-renewal survey checks the physical warehouse against the declared one.
Business interruption for a warehouse
A warehouse that burns loses more than its stock. It loses the storage fees, handling charges and distribution revenue for the months it takes to rebuild, and it may lose customers who move their goods and do not return.
Business interruption cover pays the gross profit lost during an indemnity period that starts at the damage and runs for a set number of months. For a warehouse the indemnity period should cover the time to rebuild a steel-frame building, re-rack, re-certify sprinklers and recover the customer base. Twelve months is often too short; 18 to 24 months is a more usual choice for a single-site operator. The existing article on the business interruption indemnity period sets out how to size it.
Two extensions matter for logistics. Customers' premises cover pays when a key customer's loss stops the flow of goods. Denial of access pays when SCDF or the authorities close the estate after a fire next door.
Workers are the other interruption. The fatal and major injury rate in Transportation and Storage rose to 23.8 per 100,000 workers in 2025, from 18.4 in 2024. Forklift and racking incidents sit under work injury compensation, which is compulsory for every manual worker on the floor.
Frequently asked questions
Is my customers' stock covered by my fire policy?
Only if the policy includes a goods-in-trust or customers' goods extension with a stated limit. The standard stock section covers the operator's own stock. Customers' goods are otherwise a liability matter: the operator pays only if it was negligent, and only up to its trading conditions, which is what a warehouse keepers' liability policy covers.
How do I insure stock that changes month to month?
Use a stock declaration policy. Set a maximum limit above the expected peak, pay a deposit premium, and declare the actual value monthly or quarterly. The premium is adjusted at year end to the average declared. The alternative is a fixed sum insured set at the peak, which costs more and is still wrong if the peak is exceeded.
Does an unapproved mezzanine void a claim?
It can. An insurer rates the risk on the building as declared. A mezzanine that increases storage, blocks sprinkler coverage or was never approved by SCDF is a material fact. If it was not disclosed, the insurer may reduce or refuse the claim. Declare every structural change at renewal and obtain the SCDF approval before building it.
Do I need business interruption for a warehouse?
Yes for a single-site operator, and for any operator whose customers would move their goods elsewhere during a rebuild. Stock and racking are replaced from the property policy; the storage fees and handling revenue lost over 12 to 24 months are not. Business interruption pays that gross profit for the indemnity period chosen.
Sources
- SCDF: annual statistics on EMS, fire and enforcement 2025/annual-statistics/scdf-annual-statistics-on-ems-fire-enforcement-2025.pdf)
- AIG: freight forwarders' liability
- GIA: annual sector results 2025
- MOM: Workplace Safety and Health Report 2025
General information only, not advice on any particular policy. Cover depends on the policy wording and the insurer's terms.