For insurance agents, carriers and adjusters, understanding specialized insurance products is critical to crafting tailored insurance solutions for clients across the industries. Two lesser known but useful insurance coverages are Engineering Insurance and Deterioration of Stock (DOS) insurance. While these are two distinct coverages, they are often sold together.  

Better understanding these coverages allows you to target your potential audience and help make recommendations so your insureds understand the hazards these coverages can protect against. We’ll also provide some sales tips to build your book with both existing and new clients.  

In this article, we’ll discuss both Engineering Insurance and DOS Insurance, highlighting their applications and benefits, as well as policy coverage, exclusions, limits and loss settlement practices. We will also touch on reinsurance for these coverages.  

Engineering Insurance Overview 

Engineering insurance plays a key role in mitigating risks faced by construction projects, erected machinery and operational equipment. Designed to protect material assets, construction sites and machinery over the term of the project, this property coverage helps protect stakeholders from the project’s planning stage to the erection phase and then during the operational phase of the project.  

Some Engineering Insurance History 

In both Great Britain and the United States, the Industrial Revolution had a major impact on insurance. Due to the increasing reliance on railroads, factories and increased urbanization, insurers began to develop insurance to cover risks arising from the burgeoning industrial risks both in Europe and in the U.S.  

As for insurance coverage, in 1858 in the U.K., members of the Manchester Steam Users’ Association, which provided expert assistance to businesses, founded the first engineering insurance carrier, the Steam Boiler Assurance Company. Engine Insurance, now known as Machinery Breakdown coverage, began in 1872. Soon both boiler coverage and engine coverage spread to the U.S. and other industrialized countries.  

Key Categories within Engineering Insurance 

Engineering insurance protects policyholders and key stakeholders against risks arising in construction projects, installation projects and the operation of machinery and equipment.  

Experts categorize Engineering Insurance into two main classifications, either property coverage or business income policies. They are either non-renewable or annually renewable policies.  

We will very briefly touch on reinsurance, which is critical to protect against the major risks involved in some high-value engineering endeavors. Given the significant amounts insured for projects like high-rise buildings or power plants, primary insurers often rely on proportional reinsurance treaties, such as surplus treaties or quota share agreements. 

Quota share treaties assign a fixed proportion of liability and premium between the primary insurer and reinsurer, which is helpful when portfolios are still being developed.  

Surplus treaties are more flexible, allowing insurers to retain risks up to their financial capacity, ceding the excess to reinsurers. 

One of the frequently unappreciated benefits of reinsurance is the technical support the reinsurers’ experts can offer to primary carriers in areas such as underwriting, claims handling and policy design. This is particularly helpful for complex risks like large-scale infrastructure projects or when developing prototype machinery. 

Reinsurers help to insure the solvency of primary carriers while providing technical insights on specialized coverages, where today’s less experienced underwriters may have little experience. 

Deterioration of Stock (DOS) Insurance Overview 

While engineering insurance focuses on construction and machinery risks, insurers developed DOS insurance to protect businesses reliant on cold storage for perishable goods. DOS insurance protects goods like food, pharmaceuticals, or flowers that must be stored under precise temperatures. DOS protects against economic loss due to mechanical failures. 

Policy Coverage in DOS Insurance 

A DOS policy covers perishable stock against damage caused by the following.  

For example, a food process business with large-scale cold storage can purchase DOS insurance to help recover after losses if a refrigeration unit malfunctions, resulting in spoiled goods.  

Insured Parties in DOS Insurance 

Depending on contractual responsibilities, the insured party under a DOS policy is the owner of the goods stored under refrigeration, which may differ from the owner of the cold-storage facility itself. 

Exclusions in DOS Insurance 

Like all policies, DOS insurance has exclusions. Losses not covered by DOS insurance include the following.  

As you can see, under most of these coverages, losses will be complex and require specialized adjusting.  

Policy Limits and Value Reporting Requirements 

DOS policies typically cover the selling price on the anticipated date of sale for large businesses or purchase price for frequent stock turnover. Seasonal price fluctuations may require up-to-date declarations of stock value. DOS policies are normally reporting policies, which may require monthly or periodic stock value updates. 

It’s imperative agents communicate with their clients to ensure accurate coverage, particularly during the holiday seasons, other peak business periods, or periods of rapid inflation. Strict adherence to reporting requirements ensures seamless claim and provides transparency about variations in stock value or volumes. 

Loss Settlement in DOS Insurance 

The policy’s valuation method outlines the settlement method. 

If the policy covers stock insured at its selling price, the claim settlement corresponds to the difference between the damaged goods’ anticipated sale price and the good’s salvage value. 

If the policy covers stock insured at its purchase price, the claim settlement will correspond to the difference between the cost price and salvage proceeds. I can’t imagine nor can I find a cite for how frequently insurers can collect salvage from DOS losses. Losing power in refrigerated units would significantly damage its stock, although it may have some use in dog food. (For a sickening expose on what actually occurs in pet food processing, watch this Pet Fooled video.) 

DOS insurance is critical to industries like catering, pharmaceutical manufacturing or storage and floral storage. For example, a large-scale florist cold storing seasonal flowers in anticipation of Valentine’s Day would face substantial loss if a refrigeration breakdown spoils that stock. DOS insurance would help to protect against the value of damaged goods.[2] 

Finding Potential Clients within Your Book of Business 

1. Complacency 

2. Lack of capacity 

3. Lack of confidence 

One of the best ways to uncover opportunities to sell Engineering Insurance or Deterioration of Stock Insurance is to systematically review your existing book of business. Many of your existing clients may be unaware of the risks they face or that coverages are available to cover those risks. 

Here are some recommendations on how to evaluate your current clientele to determine where to offer this coverage. 

Using your agency management system or an Excel spreadsheet, categorize your clients in the industries where they operate. Industries such as construction, manufacturing, food storage, pharmaceuticals and hospitality are prime candidates for both Engineering and DOS insurance. Here are some examples of why these industries may require these specialized coverages. 

Producers may feel they do not have time to do this, and they probably do not. But when your customer service reps have down-time, they can complete this task for your producers.  

Add a column for the policies your clients currently have and look for areas of underinsurance. If your client uses more than one agent, you may not know if they have coverage for these types of losses. Simply asking your client for time to discuss all their insurance needs to help determine coverage gaps can put your nose squarely under that other broker’s tent. Many businesses may lack specialized coverage to address risks related to their operations or assets and opening the door to a potential errors & omissions (E&O) claims by failure to offer the coverage.  

You may want to segment your client list by the size and scale of your clients’ business. The larger the operation the more significant business interruption or loss potential they have. These larger organizations can benefit from these specialized policies. For example, even a midsize contractor working on multi-million-dollar projects requires well-planned engineering insurance solutions to satisfy contractual and financial risk requirements.  

Segment industries with fluctuating values during certain times of the year. For example, a florist will have significant risks during holidays such as the 4th of July or Valentine’s Day. Caterers tend to have peak seasons, as do hotels during spring break, where restaurants are at capacity. 

You do not want to wait for a failure-to-offer E&O claim before analyzing past claims data. It can highlight areas where clients may face a significant risk of underinsurance. Even if your insured already has the coverage, this review can provide a reason for you to talk to your insured about the adequacy of their coverage limits, documenting that conversation to help protect you in any E&O action.  

Many business owners, even those running large organizations, consider insurance an afterthought. Most lack up-to-date information about the many specialized policies available. Using your book review to identify clients who could benefit from additional coverage, reach out with educational materials. These can include newsletters geared toward construction industry owners, or informational webinars or podcasts that can benefit your clients. A simple email with “Thought this podcast might interest you” is more than many agents do. Booking an appearance at local trade associations or large chambers or service organizations can highlight your expertise in various industries.  

Clients with high-value assets such as industrial machinery, expensive electronic equipment, or significant project work such as federal or local road improvement projects are prime candidates for these specialized coverages. Let them discuss their projects, which can allow you to offer solutions  

Do you have Google alerts set on your largest clients? These alerts pop up when your client issues press releases, or another entity mentions their names. This can include hiring a contractor for a new road project, or the expansion of facilities in a rapidly developing city area such as the West Valley of the Phoenix metropolitan area. If you don’t subscribe to your local and regional newspapers, consider scanning them frequently to watch for your insureds’ names. 

By leveraging cross-selling, insurance agents can strengthen client relationships and help keep your competitors at bay. You can also protect yourself against E&O claims by ensuring you offer a broad range of applicable coverages to your clients.  

By taking the time to evaluate and segment your book of business, you not only open door for additional revenue streams but also deepen your value as a trusted advisor. By proactively addressing your clients' unique risks and needs, you become more than an agent, you become their business ally.  

Strategies for Finding New Clients by Offering Engineering and DOS Insurance 

In addition to analyzing your existing book of business, proactively seeking new clients who can benefit from Engineering Insurance and Deterioration of Stock (DOS) Insurance is a great way to grow your business.  

Here are some great strategies to approach prospective clients for insurance agents. 

Focus on the industries that may require these coverages. Create a list of potential businesses in your area or region operating in sectors needing these specialized policies. You can also consider purchasing lists from list providers. Consider construction firms, manufacturing plants, or businesses awarded contracts on large infrastructure projects. Unless you have spare time and already have expertise in this sector, avoid public entities because they usually are in an insurance pool or use large brokerages that can handle all their insurance needs. Here are some industries to target.  

Use industry directories, local business networks and online resources to identify potential leads within these niches. If you’re licensed in several states, don’t limit your prospecting to the state in which you reside, but target your marketing specifically to that out-of-state business owner to let them know you understand their niche.  

You don’t need to pay for an expensive booth to network at trade shows and industry events. If you can access the vendor portion of the event, you can visit booth-by-booth to meet potential clients face-to-face. Construction expos, manufacturing conventions and food-service trade shows often attract businesses that need these coverages. Prepare marketing materials outlining the benefits of Engineering and DOS Insurance policies. These conversations can highlight your expertise in protecting business investments, infrastructure and revenue streams. 

Satisfied clients are usually the best resource for finding new business. Reach out to your highly satisfied customers, such as architects, accountants, engineering firms, prime contractors, construction subcontractors and even main street business owners to ask for referrals. According to Brent Kelly in his video, “Your best clients want to help you, but you’ve got to give them a system and a process to help them do that....” According to Brent Kelly, “Round out, retain and replicate” is a great system to build business.  

When possible and within your state’s statutes, offer some type of bonus for the referral, whether that referral buys.  

Form strategic alliances with professionals upon whom your clients rely. These can include the following. 

Collaborate with these professionals to create educational materials or to share potential leads. Remember, if you cannot or do not offer referrals in return, you’ll eventually damage that strategic alliance.  

Social media and professional platforms offer powerful tools to identify and reach out to new prospects. Working with your search engine provider, target blogs, social media posts and other targeted campaigns to attract interest. Review your top competitors’ websites to see what they’re doing and publishing. Reaching out to leads one time, though, won’t do it. Continue to run articles, social media posts and articles to target these industries. Remember, just because an organization is in your sales pipeline, it usually takes repeated contacts before they reach out.  

Host free workshops, webinars, or informational sessions tailored to industries you’re targeting. For example, rent space if needed from your local chamber or other trade organization to hold a seminar on project delay insurance. Invite construction managers or risk managers to attend. Bring in an expert if you feel unqualified to present the coverage, such as a surplus lines underwriter offering these coverages.  

When you position yourself as an educational resource, you create trust and credibility, which often leads to inquiries and eventual client relationships.  

Watch for new developments in your area, such as construction projects, warehouse expansions, or new manufacturing plant openings. Local newspaper and government announcements, board planning meetings and industry publications are solid sources for identifying upcoming projects or investments. Proactively reach out to stakeholders involved in these ventures and present tailored insurance options to meet their specific needs. Provide them with an article or other collateral that might interest them.  

Leverage location-specific risks in your ads and social media to attract interest. For example, before hurricane season, remind construction and hospitality companies that weather will create challenges that DOS insurance can cover. 

Customizing your pitch based on local vulnerabilities helps you stand out as an experienced advisor who understands your prospects’ unique risk. 

An email with a strong heading, “Are you sure you’re getting solid coverage advice from your current agent?” can help open the door in your sales pipeline.” Then offer a no-obligation risk assessment. One contact will not do it, but repeated contacts and especially customized mailings can help get your foot in the door.  

Providing upfront value helps tip the scale in your favor as a trusted agent.  

Showcase positive client experiences by citing short case studies or positive testimonials from happy clients. can significantly impact the decision-making of new prospects.  

Stories are sticky. Feature these case studies in your marketing campaigns to demonstrate why working with you will create tangible benefits. Remember, it’s not about price in insurance (we wish our clients understood this), but coverage when risk hits the fan.  

If your existing territory feels filled, explore nearby regions or states for untapped markets. Look for areas experiencing large growth in construction, manufacturing, or retail cold storage operations. For example, if you’re in Nevada, Los Angeles area builders will be working feverishly to rebuild homes and businesses. Use the same strategies for networking, referrals and lead generation to establish a presence in these new markets. 

Building Trust Through Proactive Outreach 

Retaining and developing new clients for Engineering and DOS Insurance requires more than just sales efforts. When you position yourself as an informed, trusted advisor who the insured or potential insured can turn to when problems or questions arise, you will build long-term relationships. Offering tailored solutions to the industry’s specific risks can position you as a go-to person in that industry.  

Retaining current clients through frequent education and communication and proactively developing new clients not only grows your portfolio but also strengthens your brand. With frequent communication that not only educates but celebrates achievements, such as a client signing the contract on a large project, can help build relationships. 

For insurance agents and carriers, there is a lot to know about Engineering and Deterioration of Stock insurance. Learning more about these important coverages enables you to craft targeted and effective insurance solutions. Whether educating a contractor about policy extensions like debris removal in CAR policies or guiding a florist warehouse toward DOS coverage with proper valuation, knowledge is always a win/win sales tool. 

Final Thoughts 

Insurance professionals are key players in helping businesses manage their complex risks, which are growing increasingly complex daily, it seems. Engineering Insurance can safeguard investments in infrastructure and machinery, ensuring project continuity and operational productivity. Deterioration of Stock Insurance can help to minimize income losses for businesses reliant on temperature-sensitive goods. With strong partnerships and proactive outreach, insurance agents can help meet the coverage needs of a variety of organizations.  

If you’d like more information on these important coverages, I recommend you read the #2 Swiss Re article referenced below, which I used as the basis for much of the coverage information in this article. 

[1] https://www.mdd.com/forensic-accounting-articles/stemming-spiralling-cost-delay-delay-start-dsu-advance-loss-profit-alop-insurance-cover/ 

[2] https://www.swissre.com/dam/jcr:3af81051-50db-4ea7-9e07-c0398a9145f9/pub_engineering_insurance_and_reinsurance_en.pdf 

  ​Originally Published: May 23, 2025