Construction and engineering projects don’t just involve steel, concrete, and plant. Many projects also rely on temperature-sensitive or time-critical materials and goods that can spoil, degrade, or become unusable if conditions slip. Think chilled or frozen products for catering fit-outs, pharmaceuticals for healthcare builds, specialist resins and adhesives with strict storage limits, or food and drink stock being commissioned into a new facility.
When something goes wrong—power failure, refrigeration breakdown, incorrect storage, delayed commissioning, or a site incident—losses can escalate quickly. It’s not just the value of the goods. You may face disposal costs, clean-up, programme delays, contractual penalties, and reputational damage.
That’s where deterioration insurance for perishable goods can sit alongside Construction All Risks (CAR) and Engineering insurance. It’s a specialist cover designed to respond when insured goods deteriorate due to defined events, often linked to temperature control, power supply, or equipment failure.
Deterioration insurance (sometimes referred to as “deterioration of stock” or “deterioration of refrigerated goods”) is insurance that covers loss of, or damage to, perishable goods caused by deterioration following an insured event.
In a construction and engineering context, it often applies where:
It can be arranged as:
Perishable goods are items that can spoil, degrade, or become unfit for purpose due to changes in temperature, humidity, contamination, or time.
Examples that can appear on construction and engineering projects include:
The key is whether the goods have defined storage requirements and a known deterioration risk.
CAR/EAR policies are designed to cover physical loss or damage to contract works, materials, and sometimes temporary buildings and plant, during the construction period.
However, perishable stock deterioration can fall into grey areas because:
Deterioration cover is typically structured to address these gaps by:
Policy wordings vary, but deterioration claims in construction/engineering settings often arise from:
Some policies will cover only a narrow set of triggers (e.g., breakdown and power failure). Others can be broader but will still include conditions.
Again, wording matters, but cover commonly includes:
Depending on the insurer and structure, it may also be possible to include:
Deterioration cover is often tightly underwritten. Common exclusions include:
In construction settings, insurers also pay close attention to:
When arranging deterioration cover, these are the areas that usually decide whether a claim is paid smoothly.
Some policies include a waiting period (e.g., deterioration must continue for X hours after a trigger) or a time excess for power failure.
Deterioration insurance can be relevant for:
If your contract makes you responsible for stock or temperature-controlled goods—even temporarily—this cover is worth reviewing.
A new cold room is commissioned during a supermarket fit-out. Stock is moved in early to support a phased opening. Overnight, a site power issue trips the supply. The back-up generator fails to start due to a battery fault. By morning, the temperature has been out of range for hours and the stock must be disposed of.
A well-structured deterioration policy may respond, provided alarms, maintenance, and evidence requirements are met.
A forklift clips a cold room door frame during final snagging. The door no longer seals properly. Temperature slowly rises and stock deteriorates.
Cover depends on whether the policy requires a defined “insured event” and whether the deterioration is considered a direct consequence of accidental damage.
A food manufacturing facility begins limited production while construction continues in another area. A refrigeration compressor fails and replacement parts take 48 hours. Stock in process is lost.
This is where clarity around operational vs construction phases is critical—some CAR/EAR policies end at handover, while operational policies begin. Gaps can appear if responsibilities aren’t mapped.
Insurers price deterioration risk heavily based on controls. Practical steps that can reduce losses and improve premiums include:
If you can show these controls, underwriting conversations are usually smoother.
To quote deterioration cover, insurers often request:
The more specific you are, the more accurate (and often more competitive) the terms.
Insurance should follow responsibility. On construction projects, responsibility for goods can shift depending on:
A common issue is assuming the contractor’s CAR policy covers everything on site. It may not cover client-owned stock, and it may not respond to deterioration triggers without extensions.
If you’re working under NEC or JCT, it’s worth aligning:
Deterioration is typically about spoilage due to temperature or time. Contamination can involve bacteria, chemicals, foreign objects, or taint.
Some policies exclude contamination unless it follows an insured event (e.g., water ingress due to accidental damage). If contamination risk is material (food production, pharma), you may need separate cover or specific extensions.
Often not fully. CAR policies focus on physical damage to contract works and materials. Deterioration due to temperature change or power failure may be excluded unless specifically insured.
No. Engineering inspection is typically a statutory or risk-based inspection regime. Engineering breakdown insurance covers sudden and unforeseen physical damage to machinery and can be paired with deterioration cover where refrigeration equipment failure is a key trigger.
Sometimes, but it must be declared and specifically included. Insurers will want clarity on ownership, responsibility, and controls.
Usually: temperature logs, alarm records, maintenance/service reports, proof of stock value, and a clear incident timeline showing the insured trigger.
Not automatically. BI is often separate and more common for operational sites. For projects with phased handover, you may need a combined approach.
Lack of evidence (no logs), failure to maintain equipment/alarms, or the cause being outside insured triggers (e.g., gradual deterioration or inherent vice).
If your construction or engineering project involves chilled, frozen, or temperature-sensitive goods—especially during commissioning or phased handover—deterioration cover can be the difference between a manageable incident and a major financial hit.
If you’d like, tell me:
…and I can help you outline the right insurance structure to discuss with your broker/insurer.
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