Spoilage Coverage
Updated: 10 January 2025
What Does Spoilage Coverage Mean?
Spoilage coverage is an endorsement added to a commercial property insurance policy. It provides protection against the loss of perishable stock stored on the insured property.
Insuranceopedia Explains Spoilage Coverage
What Is Covered
Spoilage coverage primarily protects perishable stock. Food is the most common type of perishable stock covered, ranging from ice cream to meat, fish, or even specialty items like fancy cakes. The insured property could be a restaurant, bakery, grocery store, food truck, or any other commercial operation that requires specific temperature or humidity conditions to store its inventory.
Other examples of perishable stock include:
- Cut flowers
- Cigars
- Blood stored in blood banks
- Pharmaceuticals stored in drug manufacturing plants
- Goods stored in cold-storage warehouses or laboratories
Most spoilage endorsements protect against losses caused by:
- Breakdown or Contamination: Mechanical failure of refrigeration equipment or contamination caused by the refrigerant.
- Power Outage: Loss of power, provided it is not caused by or under the control of the insured.
Additional Information
- The payout for a covered loss is typically based on the selling price of the goods.
- Some insurers offer discounts on spoilage endorsements if the insured has a refrigerator maintenance agreement with a professional service provider.
- While equipment breakdown insurance may offer limited compensation for refrigeration equipment failure, it usually does not provide the comprehensive coverage offered by spoilage endorsements.
