What is a Critical Spare Part? What is an Insurance Spare Part? They are Not the Same.

Is it a Critical Spare or Insurance Spare? Both a critical spare part and an insurance spare part have seperate historic definitions

The answers to those frequently asked questions are important when it comes to selecting equipment maintenance strategy and doing A-B-C inventory prioritization management


I read your article, How can I determine which critical spare parts to keep on stock in the maintenance parts store?

It is an excellent post! Thanks for sharing it.

Derived from your article I now have the following question about a critical spare or insurance spare that I would like your help to answer.

As a pure definition, what are the differences between insurance spares versus critical spares? Are they the same?

I really appreciate your help.


Dear Marcelo,

Thanks for your nice comments.

Have you tried to do an online browser search on critical spare or insurance spare with the term, “what are critical spares” and then another search for, “what are insurance spares”? There is a difference between the two categories of spare parts.

When I worked for the Swan Brewery in Western Australia durinq the late 1980’s and early 1990’s I was told that historically an insurance spare was stipulated by the Insurance Company as a spare part that you held onsite. It was to be immediately available for replacement when the part in use failed. The Insurer determined which additional parts and equipment were to be on-hand that minimised their insurance payout if operating plant and equipment failed. You had to buy and stock the specified quantity of those insurance spares to get their insurance cover at the premium they offered.

As I understand it, critical spares are those components and assemblies identified from an equipment criticality analysis that cause unacceptable business risk should those parts fail. You would expect that an insurance spare was also a critical spare. But a critical spare may not be an insurance spare. You would not need to stock a critical spare in your maintenance spares inventory when it’s guaranteed to be delivered in a timely manner if it’s needed. But you would always have an insurance spare on-hand so it’s available immediately.

The expectation is that you always keep all insurance spares and critical spares 100% reliable while they are stocked in inventory or in a warehouse. When these items are required to replace failed parts they must be fully functional and work perfectly on installation. Create planned maintenance work orders generated at the right frequency to do needed maintenance that prevents degradation of your critical spares and insurance spares so you are sure to keep all those vital spare parts totally reliable. If you don’t, your Insurer may not pay-out on the insurance policy.

In terms of ‘A-B-C’ spare parts prioritization management, insurance spares would be classed as ‘A’ priority inventory that must always be available in the store or warehouse when a failure happens. Critical spare parts would also be ‘A’ priority inventory if they could not be supplied in a timely manner, i.e. before the last stocked spare part used for a repair can fail. Those critical spares that are sure to be delivered in good time could be classed as ‘B’ priority inventory that can go down to mimimum bin quantity, which might be zero when the business risk is zero, and then get replenished.

All the very best to you,

Mike Sondalini
LRS Consultants Global