Restaurant Insurance Online :: News
SHARE

Share this news item!

Seafood Distributor Prevails in Insurance Claim for Stock Losses Due to Power Outage

Understanding the Implications of Power Outages on Business Insurance Claims

Seafood Distributor Prevails in Insurance Claim for Stock Losses Due to Power Outage?w=400

The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.

In a recent ruling by the Australian Financial Complaints Authority (AFCA), a seafood distribution business has successfully claimed insurance for stock losses incurred during a week-long power outage.
This case underscores the complexities surrounding insurance claims related to power failures and the importance of understanding policy exclusions.

The incident occurred when severe storms and flooding led to a power shutdown in the affected area. The seafood distributor was left without refrigeration for seven days, resulting in significant stock spoilage. The insurer, QBE, initially denied the claim, citing a flood exclusion clause in the policy.

However, AFCA's investigation revealed that the primary reason for the power outage was safety concerns, not direct flood damage. The energy supplier had proactively turned off electricity to prevent potential hazards, a decision made independently of the flooding. This distinction was crucial in AFCA's determination.

AFCA concluded that the power cut was not directly caused by the flood but was a precautionary measure. Therefore, the flood exclusion did not apply in this context. The ruling emphasised that insurers must carefully assess the root causes of incidents and not solely rely on policy exclusions without thorough investigation.

This case highlights several key considerations for business owners in the hospitality sector:

  • Policy Understanding: It's imperative to thoroughly understand the terms and exclusions of your insurance policy. Knowing what is covered and what isn't can significantly impact the outcome of a claim.
  • Documentation: In the event of an incident, maintain detailed records of all communications, decisions made by authorities, and the sequence of events. This documentation can be invaluable during the claims process.
  • Proactive Communication: Engage with your insurer promptly and provide all necessary information to support your claim. Transparency and promptness can facilitate a smoother claims process.

For restaurant and café owners, this ruling serves as a reminder of the importance of having comprehensive insurance coverage that accounts for various contingencies, including power outages. Regularly reviewing and updating your policy to reflect current risks and operational changes is essential to ensure adequate protection.

Published:Friday, 28th Nov 2025
Author: Paige Estritori

Please Note: We do not endorse any specific products or companies. Some content is sourced from third parties, including press releases, and may not be independently verified for accuracy or completeness.

Share this news item:

Rate this article

0 Comments

No comments yet. Be the first to share your thoughts.

Insurance News

What the Right to Disconnect Means for Restaurant Risk
What the Right to Disconnect Means for Restaurant Risk
16 Sep 2026: Paige Estritori
Australia's right-to-disconnect rules are now part of the employment landscape for small businesses, adding a fresh compliance issue for restaurants, cafes and takeaway operators. The change gives eligible employees a workplace right to refuse unreasonable work-related contact outside their ordinary hours, depending on the circumstances. For hospitality venues, where rosters shift quickly and managers often rely on texts, calls and group chats, the practical impact can be significant. - read more
Why Underinsurance Is Becoming a Bigger Risk for Restaurants
Why Underinsurance Is Becoming a Bigger Risk for Restaurants
09 Sep 2026: Paige Estritori
Fresh insurance industry attention on small business underinsurance is a timely reminder for Australian restaurants, cafés and takeaway operators to check whether their policy limits still reflect the real cost of getting back to trade. Premium pressure often receives the most attention at renewal time, but the larger risk can be a quiet gap between what a venue is insured for and what it would actually cost to replace, repair or reopen after a major loss. - read more
Why Cyber Risk Belongs in Every Restaurant Insurance Review
Why Cyber Risk Belongs in Every Restaurant Insurance Review
26 Aug 2026: Paige Estritori
Fresh attention on cyber incidents across Australian businesses is a timely warning for restaurants, cafés and takeaway operators. Hospitality venues may not always see themselves as data-heavy businesses, but modern food service increasingly depends on connected systems: point-of-sale terminals, booking platforms, delivery apps, QR ordering, loyalty databases, rostering tools and cloud accounting. - read more
Why Allergen Management Is an Insurance Issue for Restaurants
Why Allergen Management Is an Insurance Issue for Restaurants
19 Aug 2026: Paige Estritori
A renewed focus on allergen management across Australian hospitality is a practical reminder that food safety is not only a compliance issue. For restaurants, cafés and takeaway venues, it can also become a serious insurance issue if a customer suffers an allergic reaction after relying on menu information, staff advice or preparation practices. - read more
Why Battery Fire Risk Is Now on the Menu for Restaurants
Why Battery Fire Risk Is Now on the Menu for Restaurants
12 Aug 2026: Paige Estritori
Renewed insurance industry attention on lithium-ion battery fires is a practical warning for Australian restaurants, cafes and takeaway venues. The risk is no longer limited to consumer gadgets at home. Many hospitality businesses now rely on battery-powered delivery equipment, cordless tools, portable payment devices, tablets, power banks and rechargeable cleaning equipment, often used across long trading hours and charged on site after closing. - read more


Restaurant Insurance Articles

Business Interruption and Income Protection for Restaurant Owners
Business Interruption and Income Protection for Restaurant Owners
Business interruption cover and income protection can both relate to lost income, but they protect different risks. This guide explains how each type of cover may apply to Australian restaurant owners. - read more
Navigating the Insurance Landscape: Financial Strategies for Restaurant Owners
Navigating the Insurance Landscape: Financial Strategies for Restaurant Owners
In the bustling world of hospitality, restaurant owners face a unique set of challenges that can impact their financial stability. From unexpected kitchen mishaps to customer accidents, understanding the unique risks in the hospitality industry is crucial. These risks can lead to significant financial burdens if not properly managed. - read more
The Role of Staff Training in Reducing Liability Risks in Your Restaurant
The Role of Staff Training in Reducing Liability Risks in Your Restaurant
Running a restaurant involves navigating a myriad of potential liabilities. From food safety issues to customer injuries on premises, the risks are numerous. In recent years, liability concerns have become even more pressing in the restaurant industry, as businesses face strict regulations and the potential for costly litigation. - read more
What Affects Restaurant Insurance Costs in Australia
What Affects Restaurant Insurance Costs in Australia
Restaurant insurance costs in Australia can vary widely because insurers assess each venue's risks, selected covers and operating details differently. This guide explains the main factors that may influence premiums, including business size, location, cooking methods, alcohol service, sums insured, excesses, claims history and risk controls. - read more
Restaurant Stock, Contents and Equipment Insurance Explained
Restaurant Stock, Contents and Equipment Insurance Explained
Restaurant owners rely on stock, kitchen equipment, furniture, fit-out and refrigeration to trade each day. This guide explains how these assets may be insured, what risks to consider, and how to think about sums insured, spoilage and equipment breakdown. - read more

Knowledgebase
Insurance:
In law and economics, insurance is a form of risk management primarily used to hedge against the risk of potential financial loss.