The Importance of Spoilage Insurance

What is food spoilage? 

Food spoilage can be defined as a disagreeable change in a food’s normal state. Food spoilage can be detected by a change in color, a change in texture, an unpleasant odor, or an undesirable taste. When spoilage occurs, it can be due to many different factors. For example, a change in air and oxygen, moisture, light, microbial growth, or temperature could be the reason you lose food inventory. When food is left in the wrong temperatures, pathogenic bacteria such as salmonella and e. coli spread quickly. Losing food inventory can be costly without the right insurance coverage. 

What is spoilage insurance? 

More types of businesses have a need for spoilage insurance than only restaurants. Any business that has "perishable stock" faces spoilage risk. Businesses that store food at cold temperatures, such as a meat locker, have a definite need for spoilage coverage. Laboratories that handle samples, blood banks for example, also have a risk of spoilage because if there is a loss of power, samples can become ruined or contaminated.   

It is important to understand when spoilage insurance comes into action.  It is not included in a standard commercial property policy, however it is an option as an endorsement.  Businesses like the ones mentioned previously are exposed to certain types of risk, and undoubtedly need to add the spoilage endorsement. Spoilage coverage is typically inexpensive to add to a policy, which makes it even more important to have in place. It is far more expensive to not have coverage in place, than face financial penalties from a lawsuit or lost inventory. 

Food spoilage coverage can help reimburse you for the cost of your lost food and beverages, but only up to your policy's limits. As with all insurance policies, it is important to know the limits listed on your policy.  This can prevent unwelcome surprises when an incident occurs. Spoilage insurance is enacted only if the loss is from a cause of loss listed on the policy. Typically, the approved causes of loss are prolonged power outage and equipment breakdown or failure.  

  • Prolonged power outage. A power outage that's beyond your control can shut down your refrigerator or freezer units if you don't have a backup generator. This can potentially expose perishable stock to unsafe temperatures and humidity levels. 

  • Equipment breakdown or failure. If your walk-in freezer were to break down, for example, food spoilage coverage could help pay to replace spoiled or contaminated food. Keep in mind, however, that your policy may require your equipment to have service contracts in place that include regular maintenance and repair schedules. 

  • Mechanical breakdown coverage might also be helpful during an equipment breakdown. This coverage may help reimburse you for repairs or replacement costs for food-storage-related equipment, such as refrigeration systems, piping and mechanical and electrical machines. 

How can food spoilage and contamination be prevented? 

It is important to have spoilage coverage in your insurance policy because the types of losses it covers are almost always unexpected. However, it is equally important to take measures to prevent an incident from occurring. Being proactive with loss control and risk management can save you time and money as well as improve the overall quality of operations. Here are some important policies to follow within your business to prevent spoilage related losses: 

  1. Employees must wash hands, cutting surfaces, and utensils before and after handling food of any kind – especially before introducing new foods to their hands, surfaces, etc. You never want to chop lettuce on the same, surface you just chopped chicken on without cleaning between the two. That could lead to salmonella. 

  2. Pay close attention to food temperature standards and protocols. 

  3. Rotate foods so that the first foods into the cooler are the first foods that come out of the cooler. 

  1. Inspect food – especially produce – for freshness before you accept delivery. 

  2. Schedule periodic inspections to ensure that foods are at the appropriate temperature, employees are handling food safety, and that all the produce is in good shape.

If you have questions or would like more information, call any of our 3 locations in the Chicago-land area today. Our customer service representatives are eager to share their knowledge and speak with you about any insurance related topic. Zeiler Insurance is an independent insurance agency and has been providing quality customer service for 101 years in our Alsip, Chicago, and Gurnee locations. Our goal is to help you understand insurance as well as provide you with the most competitive insurance rates in the industry. Whether you are a customer or just want more information, let us help you with our years of expertise in the insurance business. 

708.597.5900 x130

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