When people think about construction and engineering insurance, they usually picture plant and tools, contract works, public liability, employers’ liability, and professional indemnity. But many firms also hold stock that can deteriorate quickly if it isn’t stored correctly.
That stock might be obvious—adhesives, resins, sealants, paints, coatings, chemicals, membranes, and specialist materials—or it might be less obvious, like temperature-sensitive components for mechanical and electrical (M&E) installations, calibration materials, or products that must be kept within a strict temperature range to remain usable.
If a freezer fails, a cold room loses power, or a temperature-controlled container is damaged in transit, the immediate problem isn’t just replacing the goods. The bigger issue is often the knock-on cost: delays, re-ordering, wasted labour, missed deadlines, and strained client relationships.
That’s where Deterioration of Stock (DoS) insurance comes in.
Deterioration of Stock insurance is designed to cover the value of stock that becomes unusable because it has deteriorated (spoiled, degraded, contaminated, or otherwise failed) due to specific insured causes.
It’s usually arranged as:
An extension to a Material Damage / Commercial Combined policy
Part of a Business Interruption package
A section within a Machinery Breakdown / Engineering policy
In construction and engineering, it’s often associated with:
Refrigeration or temperature-controlled storage (cold rooms, freezers, fridges)
Power supply risks (outages, blown fuses, electrical faults)
Equipment breakdown (compressor failure, thermostat faults)
Accidental damage to storage units or containers
DoS is different from standard “stock” cover because it focuses on spoilage due to temperature or storage failure, not just fire, flood, or theft.
You should consider DoS insurance if your business stores, uses, or supplies materials that can degrade or become unusable due to temperature, contamination, or storage conditions.
Common examples include:
Civil engineering contractors using resins, grouts, epoxies, and specialist bonding agents
Groundworks and waterproofing firms storing membranes, sealants, and chemical products
M&E contractors holding temperature-sensitive components or specialist consumables
HVAC and refrigeration engineers storing refrigerants, oils, and components
Facade and cladding contractors storing adhesives, tapes, and coatings
Specialist installers (flooring, roofing, coatings) holding products with strict shelf-life and storage requirements
Engineering workshops holding chemicals, lubricants, and specialist materials
Even if your stock isn’t “food” or “pharmaceutical”, spoilage can still be a major cost—especially when products are imported, made to order, or required for a time-critical project.
Here are realistic situations where DoS insurance can make a difference:
Power outage overnight: A distribution board fault cuts power to a storage unit. The next morning, adhesives and resins are outside their safe temperature range and must be disposed of.
Equipment breakdown: A compressor fails in a temperature-controlled container holding specialist coatings for a bridge refurbishment project.
Accidental damage: A forklift punctures a cold room wall or damages a refrigeration unit, causing temperature loss and stock spoilage.
Storm damage: High winds damage a roof, water enters the storage area, and stock is contaminated or becomes unusable.
Human error: A thermostat is set incorrectly after maintenance, or a door is left ajar, causing gradual temperature rise and product failure.
The key point: the loss isn’t always dramatic like a fire. It can be a quiet failure that only shows up when materials are needed on site.
Cover varies by insurer, but DoS commonly responds to stock deterioration caused by:
Refrigeration plant breakdown (mechanical or electrical failure)
Power failure (including failure of public supply, sometimes failure of on-site supply)
Accidental damage to refrigeration equipment
Fire, lightning, explosion (often if linked to the storage failure)
Storm or flood (where it causes spoilage, depending on wording)
Policies usually cover the cost price of the stock (or sometimes selling price, depending on the basis of settlement and policy type). Some also include:
Cost of disposal of spoiled stock
Debris removal / clean-up
Emergency call-out costs for engineers (sometimes)
Because construction and engineering firms often hold high-value specialist materials, it’s important to confirm:
Whether cover is on a replacement cost basis
Whether there are limits per location
Whether stock in portable units (e.g., refrigerated containers) is included
DoS policies can be strict. Common exclusions include:
Gradual deterioration or inherent vice (stock that naturally degrades over time)
Wear and tear or lack of maintenance (especially for refrigeration plant)
Defective stock or manufacturing faults
Incorrect storage outside manufacturer guidelines (if not linked to an insured event)
Known defects not repaired
Unexplained loss (no evidence of an insured cause)
Failure to take reasonable precautions (e.g., ignoring alarm warnings)
Some policies also exclude:
Failure of public utilities beyond a set radius from the premises
Failure due to planned outages or supplier restrictions
Losses where temperature logs are missing
This is why risk management and record-keeping matter.
DoS insurance covers the value of the spoiled stock.
Business Interruption (BI) covers the loss of gross profit (or increased cost of working) due to interruption following insured damage.
In construction and engineering, spoilage can trigger BI-like consequences:
Delayed project milestones
Idle labour and subcontractor costs
Rush shipping and premium supplier charges
Liquidated damages (LDs) risk (often excluded, but the delay cost can still hurt)
Some businesses arrange:
DoS to cover the stock value
BI or project delay-related covers (where available) to help with the wider financial impact
A good broker will help you avoid gaps where you’re covered for the materials but not the operational fallout.
DoS is rarely bought in isolation. It typically sits alongside:
Contract Works / Contractors All Risks (CAR): protects work in progress and materials on site
Plant & Tools: covers owned and hired-in equipment
Public Liability & Employers’ Liability: protects against injury and property damage claims
Professional Indemnity (for design, advice, specification): protects against financial loss claims
Commercial Combined: buildings, contents, stock, business interruption
Engineering Inspection & Machinery Breakdown: especially relevant if you rely on refrigeration plant, compressors, or specialist machinery
If you have temperature-controlled storage because you install or supply specialist products, DoS can be a smart add-on.
To quote DoS insurance, insurers commonly ask:
What type of stock is stored and what is the maximum value at risk?
Where is it stored (address, building type, security, flood risk)?
What refrigeration or temperature-control equipment is used (make/model/age)?
What is the maintenance regime (service contracts, inspection frequency)?
Are there temperature alarms and remote monitoring?
Is there a backup power supply (UPS/generator) and how is it tested?
Are there temperature logs and documented procedures?
For construction and engineering firms, also expect questions about:
Whether stock is stored at a yard, workshop, warehouse, or site
Whether stock is stored in portable containers or vehicles
Whether you store flammable or hazardous materials (which can affect terms)
A common mistake is insuring for “average stock” rather than peak stock.
Construction projects can create spikes:
Bulk deliveries ahead of a shutdown
Imported materials ordered early to avoid lead-time risk
Seasonal surges (winter gritting materials, specialist coatings, or maintenance stock)
If your policy has an Average clause, underinsurance can reduce claims payments.
Practical approach:
Identify your maximum value at risk at any one time
Consider peak periods across the year
Include stock stored in multiple locations
Factor in price volatility and supplier increases
Insurers like businesses that can demonstrate control. Simple improvements can reduce claims and help secure better terms:
Planned preventative maintenance (PPM) for refrigeration plant
Temperature monitoring with alerts to phone/email
Door alarms and staff procedures (especially for cold rooms)
Backup power (generator/UPS) for critical storage
Spare parts strategy for key components (compressors, thermostats)
Documented incident response plan (who to call, what to do)
Stock rotation and expiry control (FIFO)
For engineering-led businesses, showing a strong maintenance culture can be a major advantage.
If you ever need to claim, having the right evidence makes the process faster:
Stock records (what was stored, quantities, batch numbers)
Purchase invoices and valuation basis
Temperature logs (before and after the incident)
Engineer reports confirming cause (breakdown, electrical fault, etc.)
Photos of the equipment and any damage
Disposal certificates (if required)
If you don’t currently keep temperature logs, it’s worth implementing a simple system now.
A few issues regularly cause disputes or reduced settlements:
No clear insured cause: The stock is spoiled, but there’s no proof of power failure or breakdown.
Maintenance gaps: Refrigeration plant wasn’t serviced, or defects were known.
Wrong basis of settlement: Policy pays cost price but you expected selling price.
Incorrect sums insured: Peak stock not declared.
Stock stored outside declared locations: e.g., temporary storage at a site or in a container not listed.
A quick annual review of your insurance schedule can prevent most of these.
When comparing policies, focus on wording and practical realities:
What causes are insured? (breakdown, power failure, accidental damage)
Is public utility failure included? and what are the distance limits?
Are portable refrigeration units covered?
Is stock in transit covered? (sometimes requires separate goods in transit)
What are the excesses? (DoS excesses can be higher)
Are alarms/monitoring conditions required?
Is there a waiting period? (some policies require temperature to be out of range for a set time)
For many firms, the “best” policy is the one that matches how you actually operate day-to-day.
No. Any business with temperature-sensitive or condition-sensitive stock can benefit, including construction and engineering firms.
Often yes, but check whether failure of public supply is included and whether there are distance/time limits.
It depends. Some policies may treat this as human error and exclude it unless it results in insured damage. Good procedures and alarms help.
Not always. Many property policies cover fire/flood/theft but not spoilage due to equipment breakdown unless DoS is added.
You may need to declare the container and confirm it’s included as a location or item of plant.
Not always mandatory, but it can be a condition of cover and it’s strongly recommended.
Usually at cost price (what you paid), but some policies can be arranged differently. Confirm the basis of settlement.
Sometimes, if contamination results from an insured event. General contamination without an insured trigger may be excluded.
Sometimes, but site storage is often treated differently. Contract Works insurance may be more appropriate for materials on site.
No. Goods in Transit covers loss/damage during transportation. DoS focuses on deterioration due to storage/temperature failure.
Construction and engineering businesses run on tight schedules and tighter margins. When specialist materials spoil, the cost isn’t just the invoice value—it’s the disruption, the rework, and the delay.
Deterioration of Stock insurance is a practical way to protect your business against one of the more overlooked risks in construction and engineering: stock that becomes unusable due to power failure, refrigeration breakdown, or accidental damage.
If you store temperature-sensitive materials, use portable cold storage, or rely on specialist products with strict storage requirements, it’s worth reviewing your current insurance programme to make sure DoS is included—and correctly set up.
Need help arranging Deterioration of Stock cover as part of a wider Construction & Engineering insurance package? Insure24 can help you compare options and build a policy that fits how your business operates.
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