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Does Business Insurance Cover Spoiled Food?

Publish Date: September 2015

If you run a restaurant, grocery store or wholesale food business, keeping perishable food and beverages fresh is your company’s “bread and butter,” so to speak.

You're probably well aware that losing food inventory can be costly. Likewise, getting shut down by a governmental body because of tainted food distribution can hurt your business' financials—and its reputation.

Chef assessing stock.


An Allstate agent can answer coverage questions and help you find ways to protect what matters most.

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Food Spoilage Coverage

The Insurance Institute for Business & Home Safety (IIBHS) warns that frozen, refrigerated and shelved food can be damaged in many ways.

Food spoilage coverage can help reimburse you for the cost of your lost food and beverages, up to your policy's limits, during covered events, which may include:

  • 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, according to the Insurance Information Institute (III). 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.

You may need to meet a deductible before getting reimbursed for a food spoilage claim — read your policy or check with your agent to be sure.

Food Contamination Coverage

Food-related losses aren't limited to power or equipment failures. Food could be mishandled or improperly stored; food may arrive at your facility carrying bacteria like E. coli and make your customers ill; employees could even unknowingly transmit a virus or bacteria during food preparation.

If a health board shuts down your business after a food-borne illness outbreak, food contamination coverage can help. This coverage may help reimburse you for expenses, up to policy limits, for covered items such as:

  • Replacing contaminated food
  • Required cleaning of equipment
  • Loss of income due to the shutdown
  • Medical tests or vaccinations for affected employees
  • Advertising to help your business restore its reputation

Your policy may have limits on the maximum amount it will pay for contamination-related loss. Read your policy carefully to understand what coverage limits apply.

Food Safety Tips

Of course, the primary way to keep your perishables safe is to have both preventive and emergency backup plans for food safety, says the IIBHS. These could include:

  • Having refrigeration units regularly inspected and serviced
  • Having backup power generators or alternative, offsite food-storage facilities
  • Ensuring that employees understand and practice safe food-handling habits

Food-spoilage and food-contamination coverages are a smart backup to these basic practices. For more information on adding extra coverage to your business owners policy, contact your business insurance agent.

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This content is for informational purposes only and may not be applicable to all situations.

Coverage subject to terms, conditions, and availability. Policy issuance is subject to qualifications. Allstate Insurance Company, Allstate Indemnity Company, Allstate Fire and Casualty Insurance Company, Allstate Property and Casualty Insurance Company, Northbrook, IL. © 2019 Allstate Insurance Company, Northbrook, IL.
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