01 / The meaning
What it means.
Insurance questions arise because possession, ownership and responsibility for loss may sit with different businesses. A retailer’s contents section may not automatically include all consigned goods, and the owner’s stock insurance may restrict locations away from its own premises. Transport, exhibitions, temporary storage and return journeys can introduce further gaps. Document the goods, values and transfer points instead of relying on a general assurance that somebody has insurance.
Certain commercial consignments can also create security interests under Australian personal property securities law. The PPSR question concerns protection of legal interests, particularly if another business becomes insolvent; it is separate from insuring physical loss or damage. An insurance certificate does not replace a suitable consignment agreement or any registration that may be required. Obtain advice about the actual arrangement rather than assuming that retained ownership resolves every risk.
02 / Put it in context
A practical example.
Hypothetical example: A furniture maker leaves tables with a showroom for sale. A fire damages several tables before customers buy them. Both parties need the consignment agreement, stock records and relevant policies to establish responsibilities and potential cover.
This example illustrates the term. It does not predict a claim outcome.
03 / Read the detail
What to check.
- Check who must insure the goods and at what valuation basis.
- Check all storage, display, transit and return locations.
- Check whether the arrangement creates a registrable security interest.
04 / Start a useful conversation
A question for your broker.
Who bears the risk while these goods are in somebody else’s possession?
05 / Connect the terms
Keep the meaning in context.
06 / Apply it to your business
Related insurance guides.
Further reading
Read the source guidance alongside the relevant policy wording.
General information only. This does not take into account your objectives, financial situation or needs. Before acting, consider whether the information is appropriate for you. Cover is subject to insurer acceptance and the policy terms, conditions, limits and exclusions. Read the Financial Services Guide and the relevant PDS (where applicable) and/or policy wording before deciding.
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