Manufacturing Risk Management: Spoilage Insurance

Manufacturing Risk Management: Spoilage Insurance

Spoilage coverage is a necessity for manufacturers, distributors, and wholesalers of food and beverage products. Spoilage insurance is an endorsement added to a commercial property insurance policy. Other types of coverage, particularly equipment breakdown insurance, do not cover the loss of perishable goods from covered events. For instance, this coverage is beneficial when your refrigeration system unexpectedly shuts down or if your power systems fail.

What does spoilage insurance cover?
Most policies provide coverage from covered losses from breakdown/contamination and power outage events. This insurance covers the equivalent of the selling price of the lost goods.

How can spoilage be prevented?
Although it’s not possible to foresee accidents, power losses, or equipment malfunctions, there are prevention tips you can follow to help reduce or limit the extent of a spoilage loss.

Tip #1: Regular preventative maintenance on all machinery, electric systems, and refrigeration components
Tip #2: Proactive employee training on properly operating machinery, storing perishable goods, and how to recognize equipment malfunctions

Adding a spoilage endorsement to your commercial property policy is a smart backup in case the unexpected happens. Contact RBN Insurance Services to learn more about this beneficial coverage.

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