What Is Deterioration of Stock (Cold Storage) Insurance?

Deterioration of Stock (DOS) Insurance is often referred to as cold room insurance or cold storage spoilage insurance in Malaysia. It protects perishable goods from spoilage when refrigeration systems fail.

It is essential for businesses that rely on continuous cold-chain operations, such as:

• cold rooms
• refrigerated warehouses
• frozen food storage
• food processing plants
• poultry, seafood & meat facilities
• ice cream & dairy manufacturers
• pharmaceutical cold storage
• distribution centres with freezer capacity

This coverage is not automatically included in Fire, IAR or Machinery Breakdown policies, it must be specifically added.

Foundation structures DOS programmes for industrial and large commercial facilities where temperature stability directly affects business continuity.

Why Cold Storage Facilities in Malaysia Need This Coverage

Malaysia’s climate, power environment, and food industry patterns make cold-storage risks especially high:

• Hot temperatures accelerate spoilage
• Voltage fluctuations cause chiller failures
• Refrigeration systems run continuously, with high wear-and-tear
• Stock values fluctuate (especially before festive seasons)
• A single power outage can destroy a full cold room
• F&B, seafood, poultry and frozen food sectors rely on strict temperature control
• Contract penalties for product spoilage or late delivery are common

For many businesses, one breakdown can result in six-figure losses.

What Cold Storage / DOS Insurance Covers

Deterioration of Stock insurance covers loss of perishable or temperature-controlled goods due to:

1. Refrigeration or Cold Room Breakdown

Spoilage caused by mechanical or electrical failure of:

• compressors
• evaporators
• condensers
• refrigeration coils
• cooling fans
• defrost systems
• control panels & temperature regulators

2. Temperature Loss from Accidental Causes

Such as:

• faulty thermostat or sensor
• blocked evaporator coils
• refrigerant/coolant leakage
• control system malfunction

3. Sudden Power Failure

This includes:

• unexpected power outage
• accidental electrical trip
• generator failure
• (Excluding intentional shutdowns or utility disconnections)

4. Contamination of Goods

Spoilage due to:

• ammonia or refrigerant contamination
• smoke damage during equipment failure
• cross-contamination within compartments

Industries in Malaysia That Rely on DOS Coverage

This cover is critical for industries storing high volumes of temperature-sensitive stock:

Food Production & Processing

• poultry & chicken processing
• seafood & fisheries
• beef & meat processing
• frozen meal manufacturers
• ice cream/dairy plants

Cold Storage & Warehousing

• refrigerated logistics hubs
• 3PL cold storage providers
• distribution centres (FMCG, supermarket chains)

Pharmaceutical & Healthcare

• vaccine storage
• pharmaceutical cold rooms
• biotech facilities

Agriculture & Fresh Produce

• fruit & vegetable cold rooms
• central kitchens

If your cold room or freezer facility stores stock above RM500k – RM1 million, DOS is an essential protection.

Common Cold Storage Loss Scenarios in Malaysia

Compressor Burnout in a Cold Room

Main compressor failed during peak production.

Result: Frozen goods spoiled overnight.

Triggered: Refrigeration breakdown → DOS.

Refrigerant Leak Causing Temperature Rise

Cooling system lost ammonia, causing rapid temperature increase.

Triggered: Accidental damage → DOS.

Power Failure in Warehouse

Unplanned power outage caused freezer units to stop, damaging stock.

Triggered: Power interruption extension.

Faulty Controller or Sensor

Temperature controller malfunctioned, shutting down the cooling cycle.

Triggered: Electrical fault → DOS.

Evaporator Coil Blocked with Ice

Restricted airflow led to gradual spoilage of frozen products.

Triggered: Accidental malfunction → DOS.

How Foundation Supports Your DOS / Cold Storage Programme

1. Technical Cold Storage Assessment

We review your refrigeration setup, backup systems, stock sensitivity and temperature zones.

2. Structuring Stock Limits & Seasonal Peaks

We align limits with daily stock fluctuations and festive season load.

3. Underwriter Submission Preparation

We prepare clear technical information that improves pricing and coverage accuracy.

4. Endorsements for Stock Changes

We update limits when your stock mix changes or when capacity expands.

5. Claims & Loss Adjuster Coordination

We assist with verification, temperature logs, valuation, and documentation for spoilage claims.