Many businesses use cold storage facilities to store goods including foods, flowers and pharmaceuticals. The smallest change in temperature in these facilities, for example due to a mechanical failure, can lead to a rapid deterioration of such stocks.
Standard commercial insurance policies might not cover the value of stock lost in such scenarios, which is why bespoke deterioration of stock policies exists.
Here, we explain more about this often misunderstood area of cover.
What does a deterioration of stock policy cover?
Deterioration of stock insurance covers damage to goods stored in specified cold storage spaces, which occurs as a result of a change in temperature caused by a breakdown of the refrigeration equipment or accidental damage to it.
A customer would also be covered in the event of a result of a failure in the public electricity supply, and as a result of the escape of refrigerant gases.
Who needs deterioration of stock cover?
This cover is designed for organisations with larger exposures. If you only ever keep a few hundred pounds worth of stock in a refrigeration facility then you would normally be able to arrange sufficient cover under a standard commercial combined policy.
But for larger exposures for clients involved in industries such as food wholesalers, retailers, hoteliers, leisure and catering businesses, as well as pharmaceutical companies then a specialist engineering policy would be required.
Understanding the full range of exposures facing your customers
A deterioration of stock policy will only cover the value of goods lost or damaged following a cold store failure. However, this is highly unlikely to be the only loss your customers would face.
Other costs could include:
- Repairing or replacing machinery
- Arranging disposal or early transfer of stock
- Increased costs of working
At Ascend Broking we have a combined engineering proposition that offers the full range of engineering insurance covers that you would need – six in total – alongside inspection services, under a single policy.
This would include:-
Supporting our customers with risk management
- Deterioration of stock cover for expected sale price of the damaged stock
- Machinery breakdown
- Machinery loss of profits cover
- Computer breakdown
- Hired in Plant
Our approach to this exposure would be based around discussing what practical measures you have in place to prevent and detect sudden temperature changes in their cold storage facilities, and how you might minimise any subsequent losses following an equipment failure.
For example, you could consider whether it would be possible to transfer deteriorating stock to its end destination more quickly, or to salvage some value from that stock – e.g. turning rotting fish into fertiliser.
How we can support our clients
We have recognised there is a lack of awareness from many brokers in understanding the protection that specialist engineering covers can offer, that is why in conjunction with our preferred insurer we have responded by arranging a simple but bespoke solution for your business.
To find out more how we can help you please contact a consultant at Ascend for a free and with no obligation consultancy review – by expanding your protection you can also expand your business.