Food Spoliation Is a Consequential Loss

Our insured butcher suffered a spoilage loss due to a recent windstorm that caused the store to loose full power for a week .The insurance company is refusing to pay loss of income or extra expense due to the fact that the spoilage was due to a general power outage and not a direct physical loss to the insured location. I have questioned the position due to two conditions:. (1) the company on a previous loss eight years ago—same company, same insured and contract—paid for spoilage and paid for the loss of income when there was no direct loss; (2) in the definition of “business income” it states that the suspension of operations must be caused by direct physical loss or damage to property. I realize there was no direct loss; however, the insured definitely had damage to property in the spoilage. Do you feel ether of these conditions should change or influence the company's position on the claim?

Ohio Subscriber

While you could try to make the same argument you made on the previous loss from eight years ago, it is our opinion that the loss you describe is not covered. The windstorm did not cause a direct physical loss to the food; it caused a power outage. The spoiled food was a consequential loss, and thus not covered.

 

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