A reefer claim asks two separate questions — were you liable, and are you insured — and a mechanical failure can produce a “no” to the second while the first is still a “yes”.
Key takeaways
Because base cargo cover responds to defined perils — theft, collision, fire, load shift — and a refrigeration unit that quits is none of those. It is a mechanical failure, or a setpoint that was wrong, or a door left open. Whether your policy pays for the consequences depends on whether you bought a wording that names refrigeration breakdown, and on what conditions that wording attaches to it.
Northbridge lists spoilage among the losses a motor truck cargo policy responds to, and separately notes that reefer haulers are exposed to spoilage claims. Both things are true, and they are the reason to read your own wording rather than the category name: “cargo insurance” is not a specification.
Start with the law of the province where the load originated, which is what the federal Conditions of Carriage Regulations point you to.
In British Columbia the carrier is liable for loss or damage to the goods except as the Articles provide. The relevant exception is that the carrier is not liable for loss, damage or delay because of a defect or inherent vice in the goods being transported. A shipper whose product was already at the wrong temperature at loading, or whose packaging could not hold temperature, is arguing about inherent vice.
But the burden runs the other way on negligence: where goods move at the consignor’s risk, the burden of proving freedom from negligence is on the carrier. A carrier that cannot produce a maintenance record for the reefer unit is not well placed to discharge it.
If you are liable, the amount is measured by the value of the goods at the place and time of shipment and, in British Columbia, capped at $4.41 per kilogram of the total shipment weight unless a higher value was declared on the face of the bill of lading. On a full trailer of produce the cap is often above the invoice value; on a part-load of pharmaceuticals it is nowhere near it.
This is the part shippers and carriers argue about most, and it is not really an insurance question. Under the Safe Food for Canadians Regulations, any conveyance used to convey a food to or from an establishment, and unloaded or loaded at that establishment, must be capable of maintaining the temperature and humidity at levels that are appropriate for the food and, if necessary to prevent contamination, be equipped with instruments that control, indicate and record those levels.
Read the scope carefully: that provision binds the conveyance in relation to a food establishment, not every truck on the road. But it is exactly the establishment at the receiving end that has to decide whether to accept your trailer. A receiver that cannot show the food was held at an appropriate temperature does not have a documentation problem — it has a product it cannot lawfully use. Which is why a four-hour excursion writes off a load that arrives looking perfect.
It also explains why the recording instrument matters as much as the reefer itself. A trailer that held temperature but cannot prove it is, commercially, a trailer that did not.
Notice how much of that is telematics data you either capture continuously or do not have. Reefer monitoring is one of the few places where the operational tool and the evidentiary record are the same artefact.
It watches and it alerts. A rule that fires when the return-air temperature drifts outside a band, when the setpoint does not match the tendered requirement, or when a door opens outside a planned stop, converts a claim into an intervention — a driver who reseats a door or gets to a repair facility while the product is still good.
What it does not do is decide whether the food is safe. That decision belongs to the receiver and, where the product is under a preventive control plan, to people with an obligation to make it. An alerting system that quietly “clears” an excursion is worse than none.
Worked example: three hours of nothing at 03:00
A reefer moving frozen product from Manitoba loses its unit at 03:10. The driver is on a rest break; the alert reaches the dispatch queue at 03:12 but nobody is watching it until 06:00. Return-air temperature has risen for nearly three hours.
Liability: the carrier had custody and the unit failed. Inherent vice does not help — the product was in specification at loading, with a pre-cool record to prove it. The burden of showing freedom from negligence sits on the carrier, and the last service record for the unit is fourteen months old.
Coverage: the base perils do not describe what happened. Whether the policy pays turns on whether it names refrigeration breakdown and on the conditions attached — typically evidence of maintenance and a continuous temperature record. The carrier has the record. It does not have the maintenance history.
Quantum: the receiver rejects the entire trailer. The measure is value at the place and time of shipment; the cap is per kilogram of the whole shipment, which on frozen product is usually generous.
The change that would have mattered cost nothing in insurance terms: an alert that escalates to a person who is awake, and a preventive maintenance schedule for the unit that is actually followed. Both are the same file the adjuster will ask for.
Wordings differ, which is the honest answer. Ask your broker to show you the clause that names it, the conditions attached to it, and the deductible — and ask what happens if the failure is a setpoint error rather than a mechanical breakdown, because those are often treated differently.
That points at the act or default of the consignor, which the Articles exclude. Your evidence is the tendered instruction and the dispatch record showing the unit was set to it. If your driver set it from memory, you have no such evidence.
It can, and it frequently must. The obligation on a food business is framed around risk of contamination, not around how far off the number was.
It helps a great deal, because it records the product rather than the air. It also removes the argument that the trailer was fine but the load was not. Where the product warrants it, use both.
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