Does business insurance cover spoiled food?

By Allstate

Last updated: January 2024

If you operate a restaurant, grocery store or wholesale food business, losing perishable food inventory can be costly.— Similarly, government-ordered closures due to compromised food distribution can jeopardize both your business's financial stability and its reputation. Including food spoilage coverage and food contamination coverage in your business insurance policy can be a valuable asset in such situations.

start protecting your business today

Learn more about commercial solutions by getting a quote today.

By clicking ‘get a quote’ you will be leaving Allstate and be directed to the Insureon website*

Food spoilage coverage

Food spoilage coverage assists in reimbursing the cost of your lost food and beverages, up to your coverage limits. This coverage helps protect your business against certain risks, which may include:

  • Prolonged power outage.
    Power outages can disrupt refrigeration 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.
    Whether it's a malfunctioning walk-in freezer or equipment failure, , food spoilage coverage steps in to help pay to replace spoiled or contaminated food. Please note, that your policy may require you to have equipment service contracts in place that include regular maintenance and repair schedules.
  • Mechanical breakdown coverage
    Food spoilage coverage might also be helpful during an equipment breakdown, according to the Insurance Information Institute. This coverage may help aid in reimbursing you for repairs or replacement costs for food-storage-related equipment, such as refrigeration systems, piping and mechanical and electrical machines.

Before filing a food spoilage claim, it's essential to understand the deductible amount you'll need to pay before receiving reimbursement. Refer to your policy or consult with your agent for clarity.

Food contamination coverage

Food-related losses extend beyond power or equipment failures. Food could be mishandled or improperly stored. Mishandled or improperly stored food, bacterial contaminants like E. coli, or unintentional transmission of viruses during food preparation can lead to outbreaks.

If a health board mandates shutting down your business due to a food-borne illness outbreak, food contamination coverage comes into play. It may cover expenses such as:

  • Replacing contaminated food
  • Compulsory equipment cleaning Income loss due to the shutdown
  • Medical tests or vaccinations for affected employees

Reputation restoration advertising. Your policy may have limits on the maximum amount it will pay for contamination-related loss, so a thorough review of your policy is necessary to understand coverage limits.

Food-spoilage and food-contamination coverages are a smart backup in case the unexpected happens. To explore additional For more information on adding extra coverage options for your business owners policy, contact your insurance provider.