What Is Temperature-Controlled Cargo Insurance?
Temperature-controlled cargo insurance (also called cold chain cargo insurance or reefer cargo insurance) is insurance for physical loss of, damage to or temperature-related deterioration of cargo carried under temperature control, for example in a reefer container or a refrigerated vehicle. What the name covers differs by wording.
There are four separate subjects, and they are not automatically provided together in one policy: (A) physical damage to or deterioration of temperature-controlled cargo, (B) physical damage to the reefer container or refrigeration equipment, (C) the legal liability of carriers, freight forwarders or other logistics operators, and (D) risks to product held in a warehouse or fixed facility. The focus of this page is A.
This page is general information only and does not represent the scope, price, acceptance or any guarantee of payment under a particular policy.
Which Cargoes and Transport Are Considered?
Fresh produce, chilled or frozen food and other temperature-sensitive products may be considered. The clauses and conditions that apply differ by product group; some products (for example pharmaceuticals and similar sensitive goods) are assessed separately and are not addressed here.
- Sea transport: Carriage in reefer containers.
- Road: Domestic and international carriage in refrigerated vehicles.
- Air and multimodal transport: Temperature-controlled air cargo or transport chains that combine several modes.
Technical conformity requirements for cold chain transport (for example under ATP and TSE regulations) are subject to legislation separately; the current status of those requirements has not been verified on this page.
Temperature Variation and Physical Deterioration of Cargo
Damage to refrigerated cargo can result from conventional physical causes such as impact or wetting, and also from temperature moving outside the specified range. In some clause structures the general all risks cover leaves out loss resulting from variation in temperature and reinstates it only where it is attributable to specified causes; in other structures no such limitation exists. Which approach applies must be read from the policy.
The cause, duration and record of temperature-related deterioration may be decisive in assessing a loss. Temperature logs, telemetry data and transport documents are therefore important at the quotation and claims stages.
Refrigeration Breakdown, Power Failure and Operational Errors
The following are risks addressed in cold chain transport. The fact that a risk is described in operational guidance does not mean that it is covered by insurance; for each, the position on cover, exclusion or special condition must be verified from the policy.
- Refrigeration breakdown: In some sample clauses it is brought into cover subject to a time condition (see the next section); other wordings may differ.
- Power failure: The sample CL.423 text does not list power failure separately; how it is treated depends on the wording and on the facts of the event. There is no universal cover or exclusion.
- Incorrect setpoint and human error: Some clauses exclude loss arising from a failure of the assured or its employees to take reasonable precautions to keep the cargo cool; how another party's error is treated depends on the wording.
- Inadequate pre-cooling and hot stuffing: May relate to provisions on packing, loading preparation or the fitness of the container; whether they are named at all varies by wording.
- Humidity, ventilation and contamination: Cover depends on the wording; they are not listed separately in the sample CL.423 text.
CL.423 and Other Frozen/Chilled Food Clauses Compared
The Institute Frozen/Chilled Food Clauses family comprises sample international clauses written for food cargo in a mechanically temperature-controlled environment (March 2017 revision). The following are examples; they are not the clause of any particular policy and do not mean that these clauses are offered in Türkiye.
- CL.423 (Institute Frozen/Chilled Food Clauses (A) – 24 hours breakdown, 01/03/2017): The basic cover is all risks, but loss resulting from variation in temperature is outside that basic cover. Variation in temperature is covered only where it is attributable to causes listed in the clause: breakdown of refrigerating machinery resulting in its stoppage for not less than 24 consecutive hours (clause 1.2.1), fire or explosion, the vessel being stranded, grounded, sunk or capsized, overturning or derailment of a land conveyance, collision or contact of the conveyance with an external object other than water, and discharge of cargo at a place of distress.
- The 24-hour condition: It is required only under clause 1.2.1, for refrigeration machinery breakdown. For fire, explosion, transport accidents and the other listed causes there is no breakdown-duration condition. The period is not a general waiting period or deductible and should not be read as a rule that applies to all reefer policies.
- CL.430 (Institute Frozen/Chilled Food Clauses (A)): According to Clyde & Co's 2017 commentary it is a new level of cover introduced in the March 2017 set to align the frozen food regime with the meat regime; because the earlier limitation on variation in temperature was removed, losses from variation in temperature are also assessed within the all risks structure. The full wording of the clause has not been verified for this page; its scope, exclusions and conditions therefore cannot be inferred from the commentary, and no guarantee of current or market-wide cover is given.
- Further clauses: The same set includes extension clauses (CL.422) and a separate strikes clause (CL.424), among other texts; which clause applies must be verified from the policy.
CL.423 also contains, as an example, a condition that loss be notified promptly and in any event not later than 30 days after the insurance terminates; notification periods vary by policy.
Cargo Insurance, Reefer Equipment, FFL/CMR and Cold Store Cover Distinguished
Scroll the table horizontally to see all columns.
| A. Cold chain cargo | B. Reefer equipment | C. Carrier / forwarder liability | D. Warehouse / fixed facility | |
|---|---|---|---|---|
| Subject | Physical loss of, damage to or temperature-related deterioration of temperature-controlled cargo | Physical loss of or damage to the reefer container and refrigeration unit | The legal liability of a carrier, freight forwarder or logistics operator to the cargo owner and to third parties | Risks to product held in a warehouse or fixed cold store, and to the facility |
| Insured interest | Interest in the cargo (cargo owner, exporter or importer; depends on the contract and the passing of risk) | Interest in the equipment (owner, lessor; lessee and operator depend on the wording) | The liable operator (freight forwarder, carrier); depends on the policy | The warehouse or facility operator, or the stock owner; depends on the policy |
| Nature of cover | Physical cargo damage | Physical equipment damage | Legal liability | Stock or facility risks; outside the scope of this page |
These subjects do not replace one another and are not automatically covered under one policy. For B see Container and Equipment Insurance; for C see Freight Forwarder Liability and CMR Carrier Liability Insurance. The general framework for cargo is on the Marine Cargo Insurance page.
D is mentioned only as a scope limit: risks to product held in a warehouse or fixed cold store are assessed separately from transit cover. For the liability of a port or terminal operator, see Ports & Terminal Operators Liability.
Cover Limits, Exclusions and Special Extensions
The following are examples; the list is not exhaustive and the scope of each item varies by policy. Where the sample CL.423 text is cited, it should be remembered that it is only an example.
- Delay: The sample CL.423 text excludes loss caused by delay even if the delay is caused by an insured risk (general average expenses excepted); other wordings may differ. There is no universal cover or exclusion.
- Nature of the goods and natural deterioration: Loss caused by the nature of the goods, and ordinary leakage, loss in weight or wear and tear, are excluded in sample wordings.
- Inadequate packing: Insufficient packing or preparation carried out by the assured or its employees may be excluded in sample clauses.
- War and strikes: Excluded in the sample clause; may be extended by a separate strikes clause or special condition.
- Customs detention: Rejection, prohibition or detention by a government or its agencies is excluded in the sample clause; customs hold situations are assessed according to the policy.
- Theft: There is no universal cover or exclusion; it depends on the wording.
- General average and salvage: Within cover in some clauses; scope and limits depend on the wording.
- Mitigation and additional expenses: Costs of avoiding loss and additional expenses such as forwarding are dealt with in some wordings; whether disposal and survey costs are covered depends on the policy.
- Deductibles and limits: Deductibles, maximum limits and the basis of the sum insured are set in the policy.
Insurable Interest and the Parties to the Transport
- Cargo owner: The economic interest in the cargo is the basic foundation for insuring it.
- Exporter and importer: The interest may shift between the parties according to the sales contract, the delivery terms and the point at which risk actually passes.
- Freight forwarder: Has an interest in respect of its own legal liability; an interest in the cargo itself is not automatic.
- Carrier: Has liability arising from the contract of carriage; that liability is not the same thing as physical damage to the cargo.
- Equipment owner: The owner, lessor, lessee or operator of the reefer container or refrigeration equipment is assessed separately in respect of the equipment interest; see Container and Equipment Insurance.
Delivery terms (Incoterms) are an important indicator of how risk and costs are divided between the parties, but on their own they do not determine insurable interest in every case. The sale and transport contracts and the actual passing of risk are assessed together. For general information see the Incoterms Guide. A carrier's liability may be limited by international conventions and may not cover the real value of the cargo.
Information Needed for a Quotation and Underwriting
- Product group and perishability
- Condition and temperature of the cargo at loading
- Temperature setpoint and acceptable tolerance
- Humidity and ventilation conditions
- Packing and loading method
- Mode of transport, route, voyage and transshipment times
- Type and age of the reefer unit, maintenance and pre-trip inspection
- Power supply and back-up power
- Temperature records and telemetry
- Sum insured and claims history
- Carrier and freight forwarder contracts
- Requested limits and deductibles
This list is illustrative; the information and documents requested vary by insurer and policy structure and should not be read as a single mandatory standard form for every insurer. Acceptance, requests for further information and terms rest with the relevant insurer.
Frequently Asked Questions
What is temperature-controlled cargo insurance and how does it differ from Marine Cargo?
Is refrigeration breakdown always covered?
Is the reefer container equipment insured together with the cargo inside?
Is a carrier's or freight forwarder's liability different from this cover?
What information is needed for a quotation?
Neolife's Role
Neolife Group can assess the transport and product information, help determine a cover structure suited to the need, explore suitable insurance and reinsurance solutions, carry out placement work and compare the quotations received. This does not imply the cold chain capacity of any particular insurer or reinsurer, acceptance of cover, price or any commitment to pay; these are subject to the rules of the relevant insurer, to legislation and to the policy terms.