Cold Storage Insurance Policy Information
Cold Storage Insurance. Cold storage is a vital part of the supply chain. These facilities are used to keep perishable goods refrigerated or frozen, ensuring that they remain safe and allowing without putting the integrity of the foods at risk of spoiling.
Cold storage plants offer long- and short-term storage of goods of others in climate-controlled freezers, coolers, or refrigerators. Goods stored can include such items as dairy products, flowers, fruit, furs, meat, poultry, seafood, and other fresh or frozen foods.
Goods may be brought to the facility by customers, by trucks, railcars, or barges, or the warehouse may offer packaging and transportation services. Those specializing in food products are regulated by the federal Food and Drug Administration (FDA), which can make inspections at any time.
If you're the owner and operator of a cold storage facility, it's safe to say that you provide an invaluable service to the businesses that rely on your business owners, as well as the public at large. While you do your best to ensure that everything surrounding your business functions properly, there is always a chance that something unexpected could happen.
If unforeseen situations do arise, you are liable for the costs that are associated with them. To protect yourself from potential financial losses, investing in the right type of insurance coverage is an absolute must.
Why is cold storage insurance so important for the owners and operators of cold storage facilities? What type of insurance coverage do you need to carry? Read on to find the answers to these questions and more.
cold storage insurance protects your plant or facility from lawsuits with rates as low as $67/mo. Get a fast quote and your certificate of insurance now.
Below are some answers to commonly asked graphic designers insurance questions:
- What Is Cold Storage Insurance?
- How Much Does Cold Storage Insurance Cost?
- Why Do Cold Storage Facilities Need Insurance?
- What Type Of Insurance Do Cold Storage Plants Need?
- What Does Cold Storage Insurance Cover & Pay For?
What Is Cold Storage Insurance?
Cold storage insurance is a type of insurance specifically designed for businesses that store perishable goods in a refrigerated or frozen environment. This type of insurance covers the loss or damage of goods stored in cold storage facilities due to a variety of causes, including power outages, equipment failure, and natural disasters.
Cold storage insurance is particularly important for businesses that rely heavily on the preservation of their goods, such as grocery stores, supermarkets, and food distributors. These businesses often have large amounts of inventory stored in cold storage facilities, and any loss or damage to these goods can result in significant financial losses.
The coverage provided by cold storage insurance can vary depending on the specific policy, but it typically includes protection against loss or damage caused by power outages, equipment failure, and natural disasters such as floods and fires. Some policies may also include coverage for loss or damage caused by theft or vandalism.
In addition to covering the cost of the lost or damaged goods, cold storage insurance can also provide coverage for related expenses, such as the cost of repairing or replacing damaged equipment, and the cost of hiring a refrigeration expert to assess the damage and make repairs.
Overall, cold storage insurance is an essential form of insurance for businesses that store perishable goods in a refrigerated or frozen environment. It provides protection against potential financial losses and helps to ensure that businesses can continue to operate smoothly and efficiently in the event of a loss or damage to their stored goods.
How Much Does Cold Storage Insurance Cost?
The average price of a standard $1,000,000/$2,000,000 General Liability Insurance policy for cold storage facilities ranges from $67 to $89 per month based on location, square footage, revenue, claims history and more.
Why Do Cold Storage Facilities Need Insurance?
Cold storage facilities need insurance to protect against potential losses or damages that may occur in the course of their operations. These facilities store perishable goods such as food and pharmaceutical products, which can be subject to damage from a variety of causes, such as power outages, equipment failure, fires, and natural disasters.
Cold storage insurance can provide financial protection for the facility and its owners in the event of such losses, helping to cover the cost of repairs or replacement of damaged goods. In addition, cold storage facilities may also be required by law to have certain types of insurance coverage in order to operate.
Moreover cold storage facilities also store lot of valuable items, including expensive equipment and large quantities of stock. It is important that these businesses have adequate insurance coverage to protect against the potential loss or damage of these assets. Without insurance, a single incident could result in significant financial losses for the facility and its owners.
In short, insurance can provide peace of mind and financial security for cold storage facility owners and operators, helping to protect against potential losses or damages that may occur in the course of their operations.
What Type Of Insurance Do Cold Storage Plants Need?
There are several types of cold storage insurance coverages that cold storage plants need to carry. The specific type of coverage depends on several factors that are unique to your specific business; where your facility is located, the size of your operation, the kind of goods you store, etc.
That's why it's so important to consult with an experienced agent who specializes in commercial insurance, as an agent will be able to help you develop a comprehensive policy that will provide you with the coverage that you need to properly protect your operation.
With that said, here's a look at some of the most essential forms of cold storage insurance that are needed:
- Commercial Property - This kind of coverage protects your commercial property and the contents within it from numerous perils, including acts of nature, theft, or vandalism.
- General Liability - To protect yourself from third-party personal injury and property damage liability, you'll need to carry general liability insurance, as it covers legal defense fees and any settlements that you may be required to pay in the event that someone files a lawsuit against you.
- Equipment Breakdown - In the event that any of the equipment you rely on to keep your cold storage facility operating breaks down, equipment breakdown insurance will help to cover the cost of repairing or replacing the equipment.
- Workers Compensation - If one of your employees suffers a work-related injury, workers' comp will help to cover the cost of their medical bills and will reimburse them for any income they lose if they are unable to work while they are recovering.
These policies types are just a few examples of the cold storage insurance coverage you should consider for your facility.
Cold Storages' Risks & Exposures
Premises liability exposure is generally limited due to the lack of public access. Customer access should be limited to waiting areas, which should be kept clean, dry and free of obstacles. Proper attention to housekeeping is needed to prevent trips, slips, and falls.
There should be a disaster plan in place for unexpected emergencies. Contracts with transportation and storage providers may expose the operation to additional liability.
The plant may have a railroad sidetrack or dock. An employee should verify that no one is in the path of an incoming or outgoing train. Railroad tracks and conveyors can be attractive nuisances. The premises should be enclosed by fencing with "No Trespassing" signs posted.
Environmental impairment exposure due to ammonia and other refrigerants can be high as an accidental release can pollute air, land, or water. All tanks and pipes should be routinely tested for leakage. Spill procedures must be in place to contain any accidental discharge of contaminants.
Record keeping is critical. Contracts should be in place to dispose of all environmentally dangerous chemicals. If there are underground storage tanks, a UST policy will be required.
Workers compensation exposure is very high. To avoid frostbite and hypothermia resulting from exposure to sub-zero temperatures, the length of time spent in refrigerated areas must be limited, and protective clothing required. Freezers should have emergency exits to prevent an employee from being trapped inside.
Ongoing noise from refrigeration fans and other machinery can impair hearing. Back injuries such as hernias, sprains, and strains can result from lifting. Workers should be trained in proper lifting techniques and have conveyances available. Continual standing can result in musculoskeletal disorders of the back, legs, or feet.
Forklift operators must be properly trained. Shelving must be stable to prevent stored goods from falling onto workers. Leaking ammonia is a serious health hazard that can lead to lung damage or even death. Protective breathing equipment must be available for cleaning up leaks.
Floor coverings or coatings may be slick and accumulate condensation, posing slip and fall hazards. Housekeeping is critical. When work is done on computers, employees are exposed to eyestrain, neck strain, and repetitive motion injuries including carpal tunnel syndrome.
Electrical shocks, cuts, and burns are hazards to repair or service employees. Cleaning workers can develop respiratory ailments or contact dermatitis from working with chemicals. If the warehouse has a dock for loading onto barges, it may need U.S. Longshore and Harbor Workers coverage in addition to workers compensation.
Property exposures are high. Ignition sources include extensive electrical wiring, refrigeration equipment, and heating and air conditioning systems. The combination of faulty or inadequate electrical wiring and equipment malfunctions, open construction, and large quantities of combustible materials can lead to a severe loss.
All wiring must be up to code and adequate for the operations performed. Equipment must be inspected and maintained on a continuing basis. Ammonia leaks could cause an explosion. Detection and alarm systems should be in place.
Ammonia pipes should run outside the building to prevent accidental collision with forklifts inside the building and have impact barriers around them to prevent contact with vehicles. Emergency shut-off valves must be in place, and exhaust systems available to allow venting in the case of a leak.
Good housekeeping and fire controls are critical. Smoking should be prohibited.
If there is a sprinkler system, heads must be located high enough to avoid accidental contact with forklifts, but with enough clear space from storage facilities to allow unobstructed operation in the event of a fire.
Forklifts should be refueled in a separate, ventilated area away from combustibles. Stored products may be a target for thieves. Appropriate security controls must be taken including physical barriers to prevent entrance to the premises after hours and an alarm system that reports directly to a central station or the police department.
Business income and extra expense exposures are high. Recovering from a loss could require a lengthy time to rebuild the facility and purchase replacement refrigeration equipment.
Equipment breakdown exposures are high as temperatures for refrigeration equipment must remain constant. All equipment must be inspected and maintained on a regular basis. Back-up generators should be available.
Inland marine exposures include accounts receivable if the warehouse bills customers, computers for tracking inventory, contractors' equipment, valuable papers and records for customers' and suppliers' information, and warehouse operators' legal liability.
Contractors' equipment includes forklifts, cherry pickers, and hand trucks used for moving stored items. Warehouse operators' legal liability will depend on the contract between the facility and its customers, which should spell out who is responsible for damage to stored goods.
Additional coverage for spoilage and ammonia contamination should be considered as even a small power interruption could result in all frozen goods being condemned as unfit for consumption or sale. Duplicates must be kept of all data to permit easy replication in the event of a loss. Goods in transit coverage will be needed if the operation includes pickup and delivery of customers' goods.
Crime exposure is from employee dishonesty. Pre-employment background checks, including criminal history, should be performed on all employees handling money. Cold storage operations involve a number of transactions and accounts that can be manipulated. Loading docks should be supervised to minimize employee theft of goods. There must be a separation of duties between employees handling deposits and disbursements and reconciling bank statements. Regular audits, both internal and external, are important in order to prevent employee theft of accounts. Receipts must be provided for all payments and compared to money received.
Commercial auto exposure can be high if pickup or delivery services are provided. All drivers must be well trained and have valid licenses for the type of vehicle being driven. MVRs must be run on a regular basis.
Random drug and alcohol testing should be required. Vehicles must be well maintained, including refrigeration systems, with records kept at a central location.
What Does Cold Storage Insurance Cover & Pay For?
Cold storage facilities may be sued for a variety of reasons, including but not limited to:
Spoilage or Contamination: Cold storage facilities are responsible for maintaining a certain temperature and environment to prevent spoilage or contamination of stored goods. If there is a failure in equipment, power outage or any other incident that causes damage to the stored goods, the facility may be held liable for damages.
Insurance protection: Commercial Property Insurance or Business Owner's Policy (BOP) can cover property damage or loss, including damage to stored goods. Additionally, Product Liability Insurance can help cover the costs associated with a lawsuit resulting from contaminated or spoiled goods.
Employee Injuries: Cold storage facilities often have workers handling heavy machinery and working in sub-zero temperatures, increasing the risk of injuries. Insurance protection: Workers' Compensation Insurance can cover the medical expenses and lost wages of employees who are injured on the job. This insurance can also protect the cold storage facility from lawsuits by employees who are injured on the job.
Customer or Third-Party Claims: Customers or third parties may sue cold storage facilities for a variety of reasons, such as slip and fall accidents, property damage, or breach of contract.
Insurance protection: General Liability Insurance can help cover the costs associated with a lawsuit from a customer or third party, including legal fees, settlements, and judgments. Professional Liability Insurance, also known as Errors and Omissions (E&O) Insurance, can help cover the costs of claims related to professional services provided by the facility, such as incorrect temperature monitoring or improper storage.
Cybersecurity Breaches: Cold storage facilities rely heavily on technology and online systems to manage inventory and other operations. A data breach or cyber attack can cause significant damage to the facility and its customers.
Insurance protection: Cyber Liability Insurance can help cover the costs associated with a cyber attack, such as notifying customers, providing credit monitoring, and hiring a public relations firm to manage reputation damage. This insurance can also cover legal fees and settlements associated with a lawsuit resulting from a cyber attack.
In conclusion, insurance can provide protection to cold storage facilities from various risks and liabilities. By having the right insurance coverage, the facility can avoid significant financial losses associated with lawsuits and other legal claims.
Commercial Insurance And Business Industry Classification
- SIC CODE: 4222 Refrigerated Warehousing And Storage
- NAICS CODE: 493120 Refrigerated Warehousing and Storage
- Suggested Workers Compensation Code(s): 8291 Warehousing - Cold Storage, 8031 Store - Meat, Fish or Poultry - Retail, 7380 Drivers, Chauffeurs, Messengers, and Their Helpers NOC - Commercial
Description for 4222: Refrigerated Warehousing And Storage
Division E: Transportation, Communications, Electric, Gas, And Sanitary Services | Major Group 42: Motor Freight Transportation And Warehousing | Industry Group 422: Public Warehousing And Storage
4222 Refrigerated Warehousing And Storage: Establishments primarily engaged in the warehousing and storage of perishable goods under refrigeration. The establishments may also rent locker space for the storage of food products for individual households and provide incidental services for processing, preparing, or packaging such food for storage. Establishments primarily selling frozen foods for home freezers (freezer and locker meat provisioners) are classified in Retail Trade, Industry 5421.
- Cheese warehouses
- Cold storage locker rental
- Food lockers, rental
- Frozen food locker rental
- Storage, frozen or refrigerated goods
- Warehousing, cold storage or refrigerated
Cold Storage Insurance - The Bottom Line
To find out more about the specific kinds of cold storage insurance policies you'll need, how much coverage your plant needs - speak with an experienced insurance agent who understands the cold storage business.
Additional Resources For Warehouse And Storage Insurance
Learn about small business warehouse and storage insurance - which protects storage and warehouse facilities and protects their inventory from property damage from fire and weather, vandalism and theft and liability coverage as well.
The warehouse and storage industry is a crucial part of the supply chain for many businesses. Warehouses and storage facilities house valuable goods and products that need to be protected from various risks such as fires, natural disasters, and theft. These risks can lead to significant financial losses for businesses if they are not adequately insured.
Commercial insurance in the warehouse and storage industry helps to cover the cost of damages or losses to stored goods due to unforeseen events. This can include coverage for damages caused by fires, storms, and other natural disasters, as well as theft and vandalism. Without business insurance, businesses could be left to cover the cost of these damages out of pocket, which can be financially devastating.
In addition to covering physical damages, warehouse and storage insurance can also provide liability coverage. This can protect businesses from legal action if someone is injured on the premises or if damage is caused to a third party's property.
Overall, the warehouse and storage industry needs commercial insurance to protect against financial losses and legal liabilities that can arise due to unforeseen events. Without insurance, businesses in this industry would be at a much higher risk for financial ruin.
Minimum recommended small business insurance coverage: Building, Business Personal Property, Business Income and Extra Expense, Accounts Receivables, Computers, Contractors' Equipment, Valuable Papers and Records, Warehouse Operators' Legal Liability, General Liability, Employee Benefits, Umbrella, Hired and Non-Owned Auto and Workers Compensation
Other commercial insurance policies to consider: Earthquake, Equipment Breakdown, Flood, Goods in Transit, Cyberliability, Employment-related Practices, Environmental Impairment, Business Automobile Liability and Physical Damage, Stop Gap Liability and U.S. Longshore and Harbor Workers Coverage