Spoilage is an optional coverage available from Illinois Casualty Company (ICC) for loss or damage of perishable stock from a covered cause of loss. This coverage is automatically included on some of ICC’s program endorsements but is an optional coverage that must be added on others. Most risks in the Food and Beverage Industry have a spoilage exposure.
ICC program endorsements that automatically include coverage for spoilage:
- Bowling Centers
- Caterers
- Craft Beverages (breweries and distilleries)
- Fine Dining
- Franchise
- Restaurants and Taverns
- Restaurants and Taverns Ultra
When an insured experiences the failure of a refrigerated unit, spoilage of perishable stock may occur. Documenting any spoilage prior to discarding, or as they discard the items, is very important. An itemized list and photographs, as well as original purchase invoices, will be used to assist in adjustment of the claim.
A selling price option is available for Spoilage Coverage. The selling price of the item replaces the wholesale purchase price for consideration of the claim. This option includes several provisions which would be considered when calculating the amount.
Remember that while wear and tear is not a covered cause of loss with Equipment Breakdown Protection Coverage, this relates differently to Spoilage Coverage. A temperature change that results in a perishable item spoiling is covered under Spoilage Coverage. The temperature change can be due to mechanical breakdown or mechanical failure, which includes failure from wear and tear.
A common question we receive about Spoilage Coverage is regarding kegs of beer. Kegged beer that has not been tapped will keep up to room temperature during a power failure and would not be considered spoiled. Untapped beer can withstand several temperature changes from cold to up to 55 degrees.
For more information about ICC’s Spoilage Coverage, contact your agent or use our Find an Agent search to locate an ICC agent in your area.
