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Food Spoilage: Business Interruption from a Power Outage

By August 17th, 2023No Comments
Refrigerator thermometer spoilage area macro detail

Windstorms, Hurricanes, Tropical Storms, and Nor’easters are synonymous with power outages. One of the biggest threats businesses in the food industry face is the loss of perishable food inventory stemming from a power outage. Whether you run a restaurant, grocery store, or wholesale food business, food spoilage can be costly. 

Your Business Owner’s Insurance Policy (BOP) can carry a provision for food spoilage, but you should check for sub-limits and if a service contract is a requirement. Coverage can include:

  • Mechanical breakdown coverage: This coverage is specific to reimbursement for repairs or replacement costs for food-storage-related equipment.
  • Equipment breakdown or failure: This coverage is specific to, for example, food spoilage stemming from a walk-in refrigerator breakdown or failure.
  • Prolonged power outage/Service Interruption: This coverage is specific to refrigerator or freezer units if you don’t have a backup generator

Business Interruption / Loss of Income

This coverage includes your loss of net income plus continuing operating expenses during the time an operation is closed or partially suspended. You should, however, check your policy to confirm that the service interruption loss is a covered peril. If the loss is covered, then you should verify the time period for your deductible. Each policy is unique regarding the deductible, which can often range between 12 and 72 hours. The insurance carrier would only address any losses beyond the time period stated in your policy.

Policies, coverage, and exclusions can vary. For example, in some policies, there is a utility service exclusion which states that a loss or damage caused by a surge of power is excluded if the surge would not have occurred but for an event causing a failure of power.  In other words, the only way power outage is covered is if the damage is caused by a covered peril. (i.e. power outage causes fire and the fire causes damage).

Leave the Figuring out to a Public Adjuster

Managing a Business Interruption claim is difficult enough, when you add the complexity of a power outage and food spoilage, the chaos can become unmanageable. Don’t worry, the public adjusting team at United Public Adjusters & Appraisers Inc. specializes in policy language interpretation. Our main objective is to sift through the complexity, expedite the claim, and attain the maximum settlement you deserve! Don’t leave money on the table, reach out to our team for guidance. We do not get paid unless there is an insurance recovery, so you have nothing to lose. Give us a call for a complimentary consultation so that we can guide you on your rights. Call today at 1-800-718-LOSS or fill out this form.


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