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Sensitive Stock?  Protect Yourself With DOS Insurance

By Darragh Timlin on June 24th, 2022

Deterioration of stock insurance (DOS) is there to cover your sensitive stock such as food, flowers, pharmaceutical products or anything else that needs to be maintained in a temperature controlled environment.

DOS insurance covers you if your storage facilities suffer mechanical failure, your premise suffers a power cut and it also protects you if your sensitive stock is damaged by an accident.

If your business relies on sensitive stock, stock insurance provides a way to cover your business should your stock suffer deterioration.

What Kinds of Stock will DOS Insurance Cover?

DOS insurance covers anything that needs specialist storage facilities such as a cold room or refrigerator. These types of materials have a very short shelf life and will quickly deteriorate if storage conditions are impacted.

The usual types of sensitive stock include:

  • Food
  • Frozen goods including food
  • Flowers
  • Pharmaceutical products such as blood and vaccines

Why does my business need stock deterioration insurance?

If your business uses a high volume of sensitive stock you need DOS insurance to protect you from financial loss should an accident occur such as cold store failure.

Businesses that use DOS insurance include food wholesalers, catering companies, retailers, hoteliers and pharmaceutical companies.

With sensitive stock even small changes in temperature either way can cause rapid deterioration. Common scenarios include:

  • If your refrigeration units stop working due to mechanical failure.
  • If there is a power cut
  • If food is further spoiled by refrigeration gases escaping
  • If food is being transported and there is an accident or the refrigeration unit stops working
  • If your premises are damaged by a storm
  • If any other damage occurs to your cold store facilities such as the refrigeration units are switched off accidentally or deliberately
  • If any other damage occurs to your perishable goods that render them spoilt and unfit for use.

In many cases standard commercial insurance may not be adequate to cover the loss of your sensitive stock. This means that should an accident arise with your storage facilities or your sensitive stock you will have to shoulder the expense yourself. The best way to protect your stock is to take out DOS insurance.

What other insurance policies might I need as well as DOS Insurance?

You may need additional policies to combine with your DOS Insurance. These additional covers may include:

Repairing/ replacing machinery

Following a cold store failure, you will probably need to repair or replace machinery such as your refrigeration units. You can be protected against this with machinery breakdown and machinery loss of profits cover.  This enables you to claim for new machinery plus you are insured against loss of profits that occur when your business is forced to stop operating for a period of time.

Disposal/ Transfer of Stock

Your insurance company can help you find speedy solutions to disposal and transfer of stock. In these cases, you have to act fast to ensure that if anything can be salvaged it can reach the appropriate destination as fast as possible. For example rotting fish may be saleable as fertiliser.

If nothing can be salvaged, you need to ensure that the disposal of deteriorating food is carried out as quickly as possible so that your business can get back to operation as soon as possible.

A specialist insurance policy, such as goods in transit insurance will provide you with cover for the disposal and transfer of stock to get you back working as soon as possible.


Spoilage insurance covers you for all perishable goods stored at your premises. In general your insurance will pay out based on the selling price of your perishables in the case of damage.

The cost of new stock

Replacing stock can be extremely expensive, especially if you are a major operator in this field. Insuring your stock enables you to replace it quickly so that your business can continue as soon as possible.

No two businesses are the same, so it is important to speak to a commercial insurance specialist to ensure you are covered for this potential expense.

VAT on destroyed goods

If you sell goods or provide a service you will be well aware of how much VAT you need to pay. If your goods have been stolen or damaged in transit, you still need to consider this cost.

However, if your stock is damaged and is no longer salable, you do not need to pay VAT. Your insurer will inspect the damage when you make a claim, and any payout you receive will be exempt from VAT, too.


Stock deterioration insurance is classified as engineering insurance and is a specialized field that is only available commercially. Sadly many retailers and businesses do not realise that they may not be covered for stock deterioration in the case of an accident until it is too late.  Many shop insurance policies will provide cover for deterioration of stock as an optional extension.

Most commercial insurance policies do not provide adequate cover for stock deterioration, so although you may be covered for some of the expenses you are unlikely to be able to recover the true cost of your claim.

When a business loses stock, it is not only financially expensive; it has a detrimental effect upon your business reputation. You may lose vital business contracts, and customers and you will undoubtedly need to cease trading while you undertake the clean up operation, dispose of damaged goods, and replace your stock.

With DOS insurance you can obtain instant support. It provides cover against all sensitive stock damage, enables you to replace your stock and covers you from loss of earnings. Our team of business insurance experts is committed to helping you navigate the complexities of policy terms and conditions.

Darragh Timlin

With over 25 years’ experience, Darragh is an expert in all things insurance. Starting his career in commercial property underwriting, Darragh has worked for a number of global insurers and is now Managing Director of Brisco Business, part of the wider Henry Seymour Group.

All articles by Darragh Timlin

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