Spoilage Material Damage Cover

A Standard Fire and Special Perils Policy cover several perils like:

  1. Fire
  2. Lightning
  3. Explosion/Implosion
  4. Aircraft Damage
  5. Riot, Strike, Malicious Damage
  6. Storm, Typhoon, Hurricane, Tornado, Flood and Inundation
  7. Impact damage
  8. Subsidence and landslide including Rock slide
  9. Bursting and overflowing of water tanks, apparatus and Pipes
  10. Missile testing operations
  11. Leakage from Automatic Sprinkler Installation
  12. Bush Fire

More protection can be gained in the policy by opting for add-on covers to extend the coverage for additional risks. Spoilage material damage cover is a valuable add-on with the fire insurance policy. The add-on can be attached to the SFSP policy for an additional premium as specified in the policy schedule. Spoilage material add on covers will compensate for material/ stock that was in process and got spoiled due to cessation of operation mid-way due to perils mentioned in the policy schedule.


The add-on will extend coverage to include spoilage risk subject to certain conditions

Coverage for damage to material including stock and machinery, equipment and containers

The perils causing the spoilage need to be same as mentioned in the fire insurance policy

The coverage of this policy will extend to loss or damage by spoilage resulting from the retardation or interruption or cessation of any process or operation caused by any of the perils covered under this Policy.

Provided that liability for destruction or damage to the asset/property insured mentioned in the schedule of the policy is first admitted by the Insurance Company post analyzing the investigation report by surveyors.

If the coverage against spoilage at the time of the incident of any damage or loss is collective of more value than the sum insured on assets then the insured will have to bear the difference amount of the loss accordingly. The sum insured for spoilage material damage will be covered for an indemnity period by the insured. The sum insured being gross profit corresponding to the same indemnity period which shall not be less than one month.


Case Study

Mr. Ajay Singh owned a diary company in Nagpur was into the business of exporting yoghurt and milk-based to different parts of India. Once, a fire broke out in his production facility and it caused great damage to the packing and fermentation equipment and also to the raw material stock.

Fire-brigade engines rushed to the site immediately and doused the fire. Although no one was injured the fire caused huge damage to the packing and fermentation machinery resulting in a complete stall of operations.


Fortunately, the owner of the dairy company had taken a fire insurance policy with the added protection of spoilage material damage cover. Ajay Singh contacted his insurers immediately and the investigation was conducted by the surveyors. As per the investigation report, it was found that that the fire was caused due to one of the standard perils as mentioned in the schedule of the policy. 


As the fire was caused due insured peril the insurer covered all the losses of the diary company. It also covered the loss of perishable stock/material which got spoiled as a result of shutting down of company operations.

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