Refrigeration Breakdown Coverage
March 30, 2016
Author: Joe Karberg, Account Administrator
Refrigerated coverage, often referred to as “reefer breakdown coverage” is an essential coverage to any motor carrier who wishes to transport temperature sensitive cargo. Transporting goods across the country is already a risky business, so throwing in the additional risk of transporting perishable commodities can make the job much more challenging. Whether you’re hauling fresh produce, seafood, dairy products, or any other refrigerated item, there are a variety of things that could potentially open a motor carrier up to unnecessary risk if the proper precautions are not taken.
One of the simplest ways to avoid reefer breakdown claims is by making sure all drivers are properly trained to operate refrigeration units. Making sure each driver checks the temperature gauges periodically over the course of transit to ensure that the refrigeration unit is running correctly can help mitigate the risk of commodities spoiling. Drivers should be keeping a log (electronic or otherwise) of each inspection during the trip. This should include detailed maintenance and re-fueling logs. These logs can be very useful to an insurance company over the course of a claim. Performing an inspection prior to the trip can also help to point out any issues that could arise during delivery or if maintenance is needed. Making sure to keep the unit fueled is also a major component that can very easily be overlooked during a time crunch.
Motor Carriers along with the drivers should have clear communication with each shipper and/or broker to review and understand their requirements when hauling their goods. Many commodities can tolerate temperature swings of 5 or 10 degrees, but others require a constant temperature to keep from spoiling. Some shippers might even require a constant temperature to be set for items that can actually tolerate some fluctuation. Knowing these aspects ahead of time and maintaining detailed logs can keep perfectly acceptable cargo from being deemed spoiled due to the shipper’s requirements not being met.
Every policyholder should become familiar with all cargo exclusions that might be listed in their insurance policy. This is no different for refrigeration breakdown coverage. Many times, this coverage comes with its own list of exclusions. Sometimes the insurance carrier will allow you to haul fresh produce but does not allow meat or seafood as these items may spoil more quickly or have higher risk of theft. However, not all exclusions are specific to particular commodities. Some cargo forms will also exclude coverage for claims that arise out of operator error or will only cover the actual breakdown of the refrigeration unit. If a driver sets the refrigeration unit to the wrong temperature and the load is rejected or the driver forgets to refuel during the course of transit, this is an error on the driver’s part and may not be covered by insurance. Other insurance companies might require that a motor carrier keeps detailed maintenance logs in order for reefer breakdown coverage to apply. So if the reefer unit fails mid-delivery and there is no log to show when it was last inspected or when the last maintenance was performed then the claim may be denied. It is extremely important for policy holders to communicate with their insurance agents regarding these risks to make sure the motor carrier is covered properly.
Hauling refrigerated goods can prove to be very profitable if the right precautions are taken. Sometimes the increased reward does not come without increased risk. Ensuring that a motor carrier has the right training and procedures in place can mean the difference between a claim being covered or coverage being denied. Claims involving refrigerated goods tend to be more costly as there is a higher chance an entire load will be rejected. Having proper driving training, knowing the expectations of the shipper, as well as the insurance carrier, can save a motor carrier thousands of dollars in the event of a claim.
Education: Graduated from UWP in 2013 with degree in Business Administration/Marketing.
Insurance Experience: Working with C&B since August 2013.
Role: AA in NSTD
Hobbies: Skiing, football, video games