No Use Crying Over Spoiled Milk: Food Spoilage Coverage
It has been a full five days since Irene tore through New England and many people still find themselves without power. The first few days were fun as people adapted to their new camping lifestyle, but now they are starting to see the long-term effects of no power, such as food spoiling in their fridge. Is there any compensation for the wasted food under your insurance policy? The good news is that most policies will cover food spoilage due to a power outage up to a certain limit, typically $500. The bad news is that it may cost you more in the long run to file that claim then to bite the bullet and replace the food yourself.
Most carriers offer a loss free credit for those who have not filed claims on their policy in the past. Some of these credits can be pretty substantial, and there is the possibility of losing this credit if you file a claim for this, or any other loss. With that being said, of course there are situations where filing a claim is necessary due to the high cost of repairs. This is what insurance is for and when it should be used. Imagine a tree falls on your home and rips a hole in your roof you need to file a claim whether you lose a loss free credit or not. On the other hand, if you lost $200 worth of groceries due to a power outage, you may want to think about the ramifications of filing that claim. Most policies have a $100 deductible on food spoilage coverage, so if you lost $200 of food then you would only receive $100 for your insurance company. Assuming you have a $200 credit for being loss free on the policy then this would not be a situation in which you would file a claim. The loss free credit typically takes 3-5 years to start accruing again, so for $100 claim check you have in effect lost at least $600 in credits for the next 3 years.
This coverage is best used in conjunction with a larger claim. For instance, if you lost power for a few days and had a tree fall on your roof causing damage to your home, then it may be worth it for you to include the food spoilage in your claim. You would have already lost the loss free credit for the claim due to the severity and cost of the damage caused by the fallen tree. Therefore, you should submit for any reimbursement of damage repair that you can, including the loss of your groceries.
Each company handles this coverage differently, and each company reserves the right to remove or uphold a loss free credit after a natural disaster. Speak to your insurance agent to be sure you understand the terms in which your insurance company operates and ask whether or not you have food spoilage coverage. Your agent can also advise you if it is in your best interest to file a claim for food spoilage, or any other damage incurred by the storm.