The single most common source of disagreement in a liquor inventory claim is not the count. It is the basis of value. Three figures are in play, and the policy decides which one applies. A valuation that does not state its basis is not a valuation.
Cost
What the insured paid, per the distributor invoice. Simple to document, and for everyday stock it is often close to replacement cost. It is the figure most generic appraisals default to, because it is the one the records support without any industry knowledge.
Replacement cost
What it costs today to put the same product back on the shelf. For most of the inventory this tracks the current distributor price book, adjusted for any state minimum-pricing rules. For allocated and collectible product it does not. If a retailer cannot obtain another bottle of a limited release through the distributor at any price, the replacement cost is what the market will actually charge, and that may be many multiples of the original invoice.
Selling price
Some policies value stock sold but not delivered, or stock generally, at the insured's selling price less discounts and unincurred expenses. Where this applies, the retailer's own pricing history is the primary evidence, and it needs to be verified against POS records rather than asserted.
Why the gap matters most on allocated product
| Item | Cost | Replacement | Selling price |
|---|---|---|---|
| Mainstream vodka, 1.75L | Invoice | Roughly invoice | Modest markup |
| Everyday bourbon, 750mL | Invoice | Roughly invoice | Modest markup |
| Allocated limited-release whiskey | A few hundred dollars | 10× or more | 10× or more |
On everyday stock, the three bases are within a normal margin of one another. On allocated product, cost is an outlier, and using it understates the loss dramatically. Because allocated product is a small number of lines, it is easy to miss in a large schedule, and it is where a competent independent valuation earns its fee.
What a good report does
- States the basis of value being applied and cites the policy language when it is available.
- Shows the alternative bases for the high-value lines, so the reader can see the sensitivity.
- Sources every price: live distributor cost, state schedule, verified retail, auction or secondary-market data, with dates.
- Explains, in plain language, why certain products cannot be valued from invoices.
This is not legal advice about how a specific policy applies. It is a description of how the numbers behave. Coverage questions belong to counsel; getting the numbers right under each basis is our job. Talk to us about a specific matter.