California Property & Casualty Broker-AgentProperty InsuranceEasy
A client operates a business that stores frozen foods. They are concerned about potential financial losses if their refrigeration equipment breaks down or if there is a power outage, causing their inventory to spoil. Which Commercial Property endorsement should they add to their policy to address this specific risk?
- ABrands and Labels
- BSpoilage Coverage
- CUtility Services – Direct Damage
- DOrdinance or Law
Show answer & explanationAnswer & explanation
Correct answer: B. Spoilage Coverage
Spoilage Coverage is a Commercial Property endorsement specifically designed to cover loss or damage to perishable stock due to breakdown or contamination, or due to power outage (on or off premises) caused by a covered peril.
Why the other options are wrong
- A. Brands and Labels covers the cost to remove or obliterate brands from damaged goods, not the spoilage itself.
- C. Utility Services – Direct Damage covers damage to the insured's property due to utility service interruption, not spoilage of goods.
- D. Ordinance or Law covers increased costs due to building code enforcement, unrelated to spoiled food.
Spoilage Coverage
A Commercial Property endorsement that covers loss or damage to perishable stock due to breakdown or contamination, or due to power outage (on or off premises) caused by a covered peril.
- Crucial for businesses with perishable inventory.
- Covers equipment breakdown and power failure.
- Requires the power outage to be caused by a covered peril.
Memory trick: Spoilage Coverage protects your 'Spoiled Goods' when the 'Cooler Quits'.