What Happens If Your F&B Business Has a Major Power Outage?

In Singapore, we often take reliable electricity for granted. However, major power outages, whether due to grid issues, severe weather, or localized incidents, can happen. For an F&B business, a prolonged loss of power isn't just an inconvenience; it's a critical emergency that can quickly spiral into significant financial losses and operational nightmares.

Immediate Impacts of a Power Outage on Your F&B Business:

1. Spoiled Perishables: Without refrigeration, your entire stock of fresh ingredients, meats, dairy, and prepared foods can spoil within hours. This means significant wastage and a massive financial hit.
2. Lost Sales & Service Disruption: Power outages disable POS systems and kitchen equipment, halting sales immediately. Past incidents, like a June 2025 blackout, saw food courts refund customers as cooking operations ceased. Even brief power losses can disrupt critical gas supplies, costing F&B outlets thousands in lost sales and frustrating patrons.
3. Equipment Damage: Power surges when electricity returns can damage sensitive kitchen equipment, including fryers, ovens, coffee machines, and refrigeration units, leading to costly repairs or replacements. Past incidents, like an equipment failure at a prominent hotel leading to its own power outage, highlight how internal system failures can also cause significant damage and widespread disruption within a business.
4. Operational Disruptions: Staff cannot work effectively, food preparation halts, and cleaning processes are impacted. This can disrupt your entire schedule for days.
5. Reputational Damage: If customers are turned away or experience issues due to the outage, it can lead to negative reviews and a damaged reputation.

Does Your Insurance Cover Power Outages?

The key to coverage for power outages lies in the specifics of your insurance policies:

1. Property Insurance:
   • Standard property policies often exclude losses due to utility service interruption originating off your premises (e.g., a power grid failure down the street). While spoilage of perishables is a major concern during a power outage, coverage for it under a standard property policy is typically triggered if the spoilage is a direct result of another insured peril that caused physical damage to the property, or if specific spoilage coverage is added.
2. Business Interruption (BI) Insurance:
   • BI insurance covers lost income and continuing fixed costs when your business is disrupted by an insured peril that causes physical damage to your property. If the power outage causes physical damage (e.g., equipment damage from a surge) which is an insured peril under your property policy, then your BI policy might cover your lost profits and ongoing expenses resulting from that disruption.
   • Crucial Point: If the power outage only causes lost sales without physical damage to your property or spoilage (e.g., you can't operate but nothing is actually damaged or spoiled), standard BI may not trigger unless specific "contingent business interruption" coverage is in place for utility failures.

3. Equipment Breakdown Insurance (EBI):

• As discussed previously, EBI covers sudden and accidental mechanical or electrical breakdowns. This can include damage to equipment caused by a power surge. It may also cover spoilage if your refrigeration equipment fails due to a power surge, provided the surge directly damaged the equipment.

Preparing Your Singapore F&B Business for Power Outages:

• Review Your Policy: Don't wait for an outage to check your coverage. Speak with your insurance provider to understand specific exclusions and available extensions for power failure and spoilage.
• Backup Power: Consider a generator for essential equipment like refrigeration if feasible.
• Emergency Plan: Have a clear plan for staff on what to do during an outage, including food safety protocols for perishables.
• Supplier Relations: Maintain good relationships with suppliers for quick restocking.

A major power outage can be devastating for an F&B business. Ensuring you have the right insurance extensions in place is your best defense against the financial aftermath.

Let SMEsure™ handle the risk management for your business. This frees you up to fully focus on your business and dedicate more time to the people who matter most.

For more information on how SMEsure™ can support your business, visit us here.

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