Food inventory is one of your largest ongoing investments. When refrigeration fails, power outages hit, or contamination occurs, losing thousands of dollars in product is devastating. Spoilage coverage, a specialized property coverage, protects your inventory investment against these losses.
What Spoilage Coverage Covers
- Power outage: Loss from utility failure or on-premises power issues
- Mechanical breakdown: Refrigeration or freezer failure (requires equipment breakdown coverage)
- Contamination: Food that becomes unfit due to contamination
- Temperature deviation: Product damaged by temperature fluctuation
Coverage Considerations
Valuation
Spoilage is typically valued at cost, not selling price. A $500 prime rib is covered at your wholesale cost, not menu price. Some policies offer selling price coverage for an additional premium.
Power Outage Specifics
Coverage for power outage varies:
- Some policies cover any power outage
- Others only cover on-premises equipment failure
- Utility company outages may require specific endorsement
- Waiting periods may apply
Frequently Asked Questions
Is spoilage covered under my standard property policy?
Basic property covers spoilage from covered perils (fire damages refrigeration, storm takes out power). But mechanical breakdown of your refrigeration equipment typically requires equipment breakdown coverage, and spoilage from that breakdown requires spoilage coverage. Review your policy structure with your broker.