Summary: The Spoilage Coverage form, CP 04 40 06 07, can be used to modify the Building and Personal Property Coverage form and the Condominium Commercial Unit-owners Coverage form. It provides coverage for perishable stock due to breakdown or contamination or power outage, as indicated on the declarations.

Topics covered:

Introduction

Covered property

Causes of loss

Selling price

Exclusions

Deductible

Additional condition

Definitions

Introduction

 This endorsement extends the covered causes of loss to cover against direct physical loss or damage to perishable property. The covered causes of loss are identified in the endorsement. The endorsement allows for covered property and covered causes of loss to be identified by schedule. This article discusses the sections of the endorsements, except sections E. and I are not addressed as they merely state that the underlying policy's coverage extensions and optional coverages do not apply to the spoliation coverage.

 Covered Property

      The Coverage Form to which this endorsement applies is extended to insure against direct physical loss or damage by the Covered Causes of Loss, but only with respect to coverage provided by this endorsement.

     A. Paragraph A.1., Covered Property, is replaced by the following:

1   Covered Property

     Covered Property means "perishable stock" at the described premises owned by you or by others that is in your care, custody or control.

     B.  With respect to the coverage provided by this endorsement, property located on     buildings or in the open or in vehicles is considered to be Property Not Covered.

 Analysis

 The definition of "covered property" in the policy to which this endorsement is attached is modified to mean perishable stock at specified locations owned by or in the care, custody, or control of the named insured. The locations are those listed on the endorsement schedule or in the declarations. Coverage is not provided for property in the open, in vehicles, or on buildings.

 Causes of Loss

 C.  Paragraph A.3., Covered Causes Of Loss, is replaced by the following:

3.  Covered Causes Of Loss

     Covered Causes of Loss means the following only if indicated by an "X" in the Schedule:

a.  Breakdown or Contamination, meaning:

(1) Change in temperature or humidity resulting from mechanical breakdown or mechanical failure of refrigerating, cooling or humidity control apparatus or equipment, only while such equipment or apparatus is at the described premises; and

(2) Contamination by the refrigerant.

b.  Power Outage, meaning change in temperature or humidity resulting from complete or partial interruption of electrical power, either on or off the described premises, due to conditions beyond your control.

 Analysis

 The covered causes of loss must be indicated in the schedule; if the cause of loss is not indicated, it is not covered. If equipment that provides refrigerating, cooling, or humidity control breaks down and results in change in temperature or humidity to the perishable goods, coverage is provided as long as the equipment is at the described premises. The 2007 form added the word "mechanical" before "failure of refrigerating, cooling, or humidity control apparatus or equipment," presumably to prevent coverage for other failures of such apparatus or equipment.

 Coverage is provided if the perishable goods are contaminated by the refrigerant. Change in temperature or humidity that results from partial or complete interruption of power is also covered provided that power interruption is beyond the insured's control. The power outage can occur on or off the described premises; coverage is provided as long as it is identified as a cause of loss on the schedule.

 Selling Price

 D. Selling Price

     If Selling price is indicated by an "X" in the Schedule, the following is added to the Valuation Loss Condition:

     We will determine the value of finished "perishable stock" in the event of loss or damage at:

1.  The selling price, as if no loss or damage had occurred;

2.  Less discounts and expenses you otherwise would have had.

 Analysis

 The selling price is an aspect of loss valuation; if the schedule indicates selling price, then the damaged product will be valued at the selling price less any discounts and expenses the insured would have had. For example, the insured had refrigerated cases of shrimp that he planned to sell on the weekend for 10 percent off. Due to a power failure, the shrimp spoiled. The cases of shrimp would be valued at their original selling price less the 10 percent discount the insured had planned to offer at the sale.

 Exclusions

 F.  Paragraph B., Exclusions, is replaced by the following: