Deterioration of stock cover explained

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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.


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 business 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?

Potential businesses could include food wholesalers, retailers, hoteliers and catering businesses, as well as pharmaceutical companies.

Understanding the full range of exposures

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 you would face.

Other costs could include:

Repairing or replacing machinery
Arranging disposal or early transfer of stock
Increased costs of working

Supporting you with risk management

You are going to be under intense pressure when faced with a deterioration of stock, because this could potentially lose contracts.

We support our customers with risk management, such as discussing what practical measures they have in place to prevent and detect sudden temperature changes in their cold storage facilities, and how they might minimise any subsequent losses following an equipment failure.

For example, businesses 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.