Only if your policy has the right section. business.gov.au describes deterioration of stock insurance as cover for lost stock in cold storage after a fridge or freezer breaks down, and on business packages it is commonly an optional extra. Repairing the fridge is machinery breakdown, a separate section. Stock lost in a power outage depends on whether the wording extends to failure of the electricity supply. Food spoilage insurance on a cafe, restaurant or grocery policy can pay for one of these losses and nothing for the next.
One breakdown, three separate losses
When a cool room compressor fails on a Saturday night, a food business usually loses three things at once: the stock, the repair bill and the trade while the kitchen or shop runs short. Each sits in a different part of a business policy. business.gov.au lists them separately:
- Deterioration of stock covers lost stock in cold storage after a fridge or freezer breaks down.
- Machinery breakdown covers repair or replacement of broken-down machinery, such as the compressor or the fan motor.
- Business interruption pays your ongoing business costs if an insured event interrupts your business.
Holding one does not give you the others. A policy with machinery breakdown and no deterioration section pays the technician and nothing for the meat in the bin. Packages for cafes and bakeries commonly treat both as optional, so read the schedule, not the brochure.
A fridge breakdown and a power outage are different claims
Food spoilage insurance wordings name the causes they respond to. The usual list is breakdown of the refrigeration plant, a change in temperature after accidental damage, and failure of the electricity supply. The first is the most straightforward claim. The last is where most arguments start.
Many wordings pay for a failure of the public supply only if the section says so in terms. Some exclude a cut the supply authority makes on purpose, such as planned maintenance or load shedding on a hot afternoon. Some apply a time excess, meaning the power has to be off for a minimum number of hours before the section pays anything.
On your schedule, look for the causes listed, any time excess and the limit for this section, which is often lower than the sum insured on your stock. A grocer with a walk-in cool room of dairy and meat, like the stores on our grocery store insurance page, has more riding on that limit than a cafe with one under-bench fridge.
Can you claim from the electricity distributor instead?
Sometimes, for a narrower set of events. The Essential Services Commission, Victoria’s energy regulator, says customers can lodge a compensation claim with their distributor for damaged property or food spoilage caused by an unauthorised voltage variation, for example a power surge. The distributor may ask for proof such as technical reports, photos or receipts. If you are unhappy with how the claim is handled, the commission points to the Energy and Water Ombudsman Victoria.
Do not confuse that claim with the reliability payments the commission calls GSL payments. It says those range from $40 to $380 and go to customers whose supply falls below set reliability thresholds, usually as an automatic bill credit. It also says they may not be payable where an unplanned outage was caused by events outside the distributor’s control. A credit of that size will not replace a cool room of stock. Your own policy is the main source of money here, and the distributor is at most a second one.
The four-hour rule and what you throw out
An insurer pays for stock that spoiled. It is much harder to claim for stock thrown out with no record of why. The Victorian Department of Health’s factsheet on food safety after a power failure says food still cold to touch, below 5°C, is safe to use. Once cold or frozen food is no longer cold to touch, it can be kept for up to four hours and then must be thrown away, or cooked and eaten if it is raw meat. Frozen food that is still solid when the power returns is safe to refreeze.
The factsheet is written for the community, and your council or your own food safety records may hold you to a stricter standard. For the claim, what counts is that each decision to discard follows a rule you can show. Record the temperature when you find the problem and again before anything goes in the bin.
What to keep for the claim
- Temperature logs. The records you already keep for food safety, plus readings taken during the event.
- Photos. The stock before it is discarded, with the unit and its temperature display in the frame.
- A stock list. What was lost, the quantities, and supplier invoices showing what you paid.
- The technician’s report. It names the cause, which tells the insurer whether this was a breakdown, wear and tear or a supply problem.
- Outage details. The date and duration, and any confirmation the distributor gives you.
Call before you throw out a large load if you can. Some insurers want to see the stock first, and policies usually expect you to limit further loss, for example by moving food to a unit that still works.
Setting it up before the next long weekend
Most spoilage disputes are about limits, not whether the section exists. Set the deterioration limit on your highest stock level, such as the week before Christmas, not the average week. Ask whether an ageing compressor would be refused as wear and tear, since machinery breakdown sections commonly exclude gradual deterioration. If a week without the cool room would cost more in lost sales than in stock, check that your business interruption insurance extends to machinery breakdown and to failure of the power supply. A standard interruption section often responds only to physical damage such as fire or storm.
What FRS does: we read the deterioration, machinery breakdown and interruption sections side by side against your premises and equipment list, set the limits on your real stock levels, and ask insurers how each wording treats an outage on the supply network. After a loss, we help you lodge the claim with the logs, photos and invoices the insurer will ask for.
For the sections a dining venue usually carries, see our restaurant insurance page.
Frequently asked questions
Does business insurance cover food spoiled in a power outage?
Only if the policy has a deterioration of stock section that names failure of the electricity supply as a cause. Many business packages leave that section out unless you add it, and some wordings exclude deliberate cuts by the supply authority or require the power to be off for a minimum number of hours. Check the causes, time excess and limit on your schedule.
Is a commercial fridge repair covered by business insurance?
Only under machinery breakdown cover, which business.gov.au describes as paying for repair or replacement of broken-down machinery. It is a separate section from deterioration of stock, so you can hold one without the other. Wear and tear and gradual deterioration are common exclusions, so a breakdown put down to the age of the compressor may not be paid.
Can I claim spoiled food from my electricity distributor in Victoria?
Sometimes. The Essential Services Commission says customers can lodge a compensation claim with their distributor for damaged property or food spoilage caused by an unauthorised voltage variation, such as a power surge, with proof like photos, receipts or technical reports. If you are unhappy with how it is handled, the commission points to the Energy and Water Ombudsman Victoria.
Should I throw out spoiled stock before the insurer sees it?
Not if you can avoid it. Photograph the stock, record the temperatures and call your broker or insurer first, because some insurers want to inspect a large loss. Where food safety forces a quick decision, the Victorian Department of Health says food no longer cold to touch can be kept for up to four hours and then must be thrown away.
Questions about your own cover? Call 03 7046 3766 on weekdays between 9:30am and 6pm, or send us an enquiry.
