Glossary
Spoilage coverage, defined
Payment for perishable stock ruined when refrigeration or climate control fails, whether from a mechanical fault, a power outage or contamination by a refrigerant leak.
In practice
Property forms pay for stock destroyed by fire or theft but not for stock that simply warmed up. This add-on names the causes it responds to, commonly a fault in the cooling unit and interruption of utility power, sometimes only when the outage originates off the premises. Restaurants, grocers, florists, pharmacies and any business with a walk-in cooler buy it. The limit is set to the value of stock on hand at peak, and a small deductible applies. Carriers may require a temperature alarm or a backup generator before writing larger limits. It usually pays the cost of the stock rather than its selling price, unless written for selling price.
A worked example
Suppose a florist's cooler fails overnight before a wedding weekend and $7,000 of cut flowers wilt. The policy carries a $10,000 spoilage limit with a $250 deductible; the florist is paid $6,750 and rebuys stock. Hypothetical.
Applies to: Restaurant InsuranceRetail Business Insurance