Spoilage Coverage

Updated: 29 February 2024

What Does Spoilage Coverage Mean?

Spoilage coverage is an endorsement to a commercial property policy. It provides coverage for loss of perishable stock that are stored at the premises of the insured property.

Insuranceopedia Explains Spoilage Coverage

What Is Covered

Food is the obvious perishable stock that is covered by spoilage coverage. It can anything from ice cream to meat, fish to fancy cakes. The insured property can be a restaurant, a bakery, a grocery store, a food truck, or virtually any other commercial operation that stocks food at a particular range of temperature or humidity.

Other perishable stock include:

  • Cut flowers
  • Cigars
  • Blood kept in blood banks
  • Drugs kept at pharmaceutical plants
  • Goods kept in cold-storage warehouses or laboratories

Most spoilage endorsements cover losses from two perils:

  1. Breakdown or Contamination (mechanical failure of refrigeration equipment or contamination by the refrigerant)
  2. Power Outage (so long as it is not caused by or under the control of the insured)

Other Info

The payout for a loss is often equivalent to the selling price of the goods.

Some insurers offer discounts on spoilage endorsements if the insured has a refrigerator maintenance agreement with a company that provides such services.

Equipment breakdown insurance might provide some compensation for the breakdown of refrigeration equipment, but it's unlikely to be broad enough to cover the events insured under spoilage endorsements.

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