NICK Feature Question: Whose Insurance covers the tenant’s loss of food and loss of business revenue?

The Network for Incubator and Commissary Kitchens (NICK) is the largest network of shared kitchen professionals sharing their knowledge and insights daily. Below is a summary of a recent conversation regarding tracking company success and utilizing performance indicators. Answers may have been edited for readability.

Question:

Power goes out in Shared Kitchen due to a large storm, its out for 2 days, no back-up power supply. Whose Insurance covers the Tenant’s loss of food and loss of business revenue? Is it the Kitchen or the Tenants insurance?

Back story: Our kitchen isn’t built yet, so my food company is still a tenant at a shared kitchen and power went out yesterday. 15 tenants food is now all spoiled. I had a $15k order that could not be filled. Etc etc. Owner is saying my insurance should cover it but I have been told by others that it’s the kitchen responsibility to provide power and or coverage for loss/damaged goods. That’s why we pay rent. This is a good thing to know as we build our kitchen also.

Responses:

  • Depends entirely on how the contracts are written
  • Tenant’s responsibility. Our contract stipulates this and we advise all clients to make sure their insurance specifically covers this situation.
  • Under our contracts it is the stipulation that clients maintain liability insurance for exactly that reason. I make it clear in every first meeting that our insurance covers the walk-ins themselves, but not members’ content. That really sucks, though, and I’m sorry that happened to you. We at least have temp monitors in all of our refrigeration here, so that if something goes out of temp we can pivot quickly.
    • I’ve heard good things about Monnit. https://www.monnit.com/
    • I have GREAT monitors (a friend if mine owns the business.) Saved my kitchen and many kitchens I know of lots of loss and money! All from smart device. Tracks and can generate reports. Extremely cost effective. Personalized service and custom, super easy set up. Cannot say enough. www.akipowertech.com
  • Tenants business insurance should [cover] their loss. Same, we cover facility. We don’t cover contents.
  • Every Tenant should have their own insurance. Their business. You don’t own any of it so you cannot report the loss. However, your own insurance can report the loss of revenues. Btw, as facility op you should have protocols to what happens when equipment breaks down or weather knocks out power. And a shared kitchen should have a back-up Generator.
  • Have them sign a release and hold harmless agreement.

Additional Resources:

  • The Food Corridor software can help your kitchen manage its tenant’s storage rentals and policy & insurance documents, and allows for quick communication to all of your tenants. Schedule a demo and one of our Gnomes in the know will show you how easy it is.
  • The Shared Kitchen Toolkit is a comprehensive guide to starting a new shared-use or incubator kitchen and managing day-to-day operations. Check out the sections on Kitchen Insurance and Rental Documents!
  • What You Need to Know About Commercial Kitchen Insurance – Read more for coverage guidance from FLIP (Food Liability Insurance Program) to food businesses renting out space in shared-use kitchens.

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