Commercial Spoilage – What Does it Cover?

Spoilage coverage is an endorsement to a business owner’s policy (BOP) that may cover perishable stock at a business for breakdown or contamination and for a power outage. Perishable stock can refer to any stock that is maintained under controlled conditions for its preservation and is susceptible to loss or damage if the controlled conditions change. Many restaurants, coffee shops and other food service businesses will have this exposure considering their large inventory of frozen and refrigerated items. Other industries at risk include greenhouses, cold storage warehouses and more.

Spoilage coverage reimburses businesses when power outages ruin perishable items. If your business must temporarily close due to a loss of perishable stock, business income coverage may apply, talk with your local agent.

Equipment breakdown is another coverage you won’t want to be without that protects you against unexpected repair or replacement costs due to an electrical, mechanical, or pressure system breakdown. This could also help cover a spoilage/refrigerant contamination exposure. Talk to your local agent about your options with respect to covering your perishable goods.

For Example…

A car hits a power pole down the street and causes a power outage which causes your refrigeration system to not operate effectively. Temperature rises after the occurrence and now most, if not all, of your perishable goods are spoiled. Spoilage coverage could assist with replacing that inventory.

If your business relies on temperature controlled conditions, commercial spoilage coverage can protect you in an unforeseen circumstance. Talk to your Local Rural Mutual Insurance agent for help with identifying your business risks for such losses.