Insurance 101 – Chapter 4 – Volume 26 – Loss or Shortage Disclosed on Inventory

Loss or Shortage Disclosed on Inventory

The “mysterious disappearance” exclusion is often paired with, or followed by, an exclusion for loss or shortage disclosed on taking an inventory because of the similarity of moral hazard raised by losses either unknown or not discovered until an inventory is taken. The inventory shortage exclusion is often misunderstood and misapplied. The exclusion, in simple, clear and unambiguous language states: “This policy does not insure against … [l]oss or shortage disclosed upon taking inventory.”

The following video was adapted from my book, “Insurance Claims A Comprehensive Guide” Published by the National Underwriter Company and is available at the Zalma Insurance Claims Library

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