Get To Know Deterioration Of Stock (DOS) Insurance

One general insurance product that is still part of engineering insurance line is Detorioration Of Stock (DOS) Insurance. As the name implies, this type of insurance provides protection to insured against risk of financial loss that may be suffered in connection with occurrence of spoilage or damage to goods (stock) stored in cold storage.

There are two types of risks that are usually covered in this DOS insurance policy, Firstly fluctuations of temperature in cold storage concerned as a result of following conditions: collapse or death of part or parts of the cooling machine while cooling machine is running/starting that occurs either because of a defect in the machine that causes the machine to stop suddenly and needs to be repaired or replaced with another machine before the machine can work or function normally again.

Next condition is damage to refrigeration equipment due to a sudden cause, except fire, lightning strike or explosion, flood or puddle. Next is the condition where the damage or interruption of electricity supply supplied by the official electricity company due to a cause that occurs suddenly outside of the intentional action by electricity company.

Second type of risk that is insured is risk of loss due to the influence of steam/smoke, drugs/coolant spilling out of cooling machine, whatever the cause. In addition, DOS policy also insure reasonable costs incurred to prevent loss or damage as a result of the deterioration or damage to goods (stock), such as costs for moving the endangered goods to another cold storage.

There are three parties that can be insured under a DOS policy, namely first, owner or operator who is also owner of cold storage, in case that goods (stock) stored in the cold storage are the property of owner or operator of cold storage.

Second, owners of goods (stock) stored in cold storage, in the event that owners of goods are not owners of cold storage. And third, owner or operator of cold storage and owner of goods stored in cold storage, in the event that owner of goods is not owner and/or operator of cold storage. In this case, all of the parties are joint insured and the responsibilities of each party are no longer separated.

Claims on a DOS policy are paid based on value of items listed in monthly declaration prior to loss or selling price that can be obtained for items included in monthly declaration, or whichever is lower. Furthermore, proceeds obtained from sale of these goods as well as storage costs that can be saved due to termination of storage of these goods will reduce amount of indemnity.

Like Machinery Breakdown Insurance, DOS insurance is usually also held for a period of 12 months (on an annual basis). For DOS insurance coverage, insurer usually requires insured to pay a “deposit premium” based on a certain percentage (usually 75%) of sum insured stated in the policy schedule, and at the end of coverage period an adjustment will be made to premium based on copies. From stock book or based on a monthly declaration submitted by insured to insurer. With this adjustment, it will be known whether the insured still has to pay an additional premium or is otherwise entitled to receive a premium refund from the insurer.

Determination of sum insured for the goods (stock) insured must be equal to estimated selling price that can be obtained for goods stored in cold storage during policy period. Estimated selling price is listed by insured in list of plans submitted or submitted to insurer before insurance starts to run. Meanwhile, the insured is obliged to deliver to insurer sometime after expiration or expiration of each month copies of stock book or declaration showing amount and average daily value of goods or stock stored during the previous 1 (one) month (monthly declaration). Monthly declarations are based on selling price that can be obtained for declared goods. With this declaration system, average provision does not apply to sum insured.

It should be noted that DOS insurance policy also applies a "deductible" or "excess" provision, which is a part of loss or claim that must be borne by insured in each claim for each incident.

Just like other engineering insurance policies, DOS insurance policy also has four exceptions, namely first, losses or liability as a result of deterioration or spoilage of goods (stock) in cold storage. For example, claims for loss of market (loss of market price) and claims for third parties that suffer from poisoning after consuming contaminated food.

Second, loss or damage to goods (stock) in storage caused by war risks. Third, loss or damage to goods (stock) in cold storage caused by nuclear reactions, nuclear radiation or radioactive contamination. Fourth, loss or damage to goods (stock) in cold storage caused by fire, lightning strikes, falling aircraft or objects falling from aircraft, theft, flooding, puddles of water. (inundation), earthquake and volcanic eruption.

Special conditions stipulated in this DOS insurance policy include cooling machine in cold storage where the insured stocks must also be insured under Machinery Breakdown (MB) policy which is valid as long as the DOS policy is valid, without questioning which insurance company. Issuing is and MB policy or who is the guarantor.

Furthermore, underwriting considerations in accepting DOS insurance include: condition/condition of cooling machine, installation of an alarm system, readiness of cooling machine, maintenance of cooling machine, cold storage maintenance, cold storage repair facilities, classification cold storage, classification of goods (stock), standby cold storage, cold storage location, and cold storage age.