By: Brian Schrumpf The terms “Reefer Breakdown Endorsement” and “Reefer Breakdown insurance coverage” should raise red flags for motor carriers, brokers, freight forwarders, and shippers. Why? Because insurance policies with Reefer Breakdown coverage commonly deny cargo claims on reefer loads. This article explains what a Reefer Breakdown Endorsement is and common insurance issues that arise from the endorsement. You are most likely to encounter a Reefer Breakdown Endorsement in one of these scenarios:
- You are involved in a cargo claim for a refrigerated load.
- You are purchasing cargo insurance and considering whether to add Reefer Breakdown coverage to your cargo policy.
- You are reviewing a transportation company’s Certificate of Insurance that lists Reefer Breakdown coverage.
- The reefer unit cannot be older than 10 years.
- All manufacturer’s recommendations regarding repair and maintenance must be followed.
- The reefer unit must be inspected monthly and documentation of inspection retained.
- All repair documents must be retained.
- The cause of damage must be “conclusively proven” to be from reefer malfunction or breakdown. “Conclusive proof” can be difficult, especially when there are various factors.
- Certain parts of the refrigeration system are not covered, even if they malfunction or breakdown (e.g. sensors, valves, seals, and air chutes).
- Breakdown arising from improper refrigerant, fuel, or oil levels is not covered.
- Faulty defrost cycle is not covered.
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