If your business has lost power during Hurricane/Tropical Storm Harvey, you aren't alone: Power and utility companies in Texas reported up to a quarter million customers have gone without electricity at some point as a result of the storm, with several thousand homes and businesses still without power as of Tuesday morning.
And with extensive flooding likely to hamper repair and recovery efforts, long-term interruptions are likely for many businesses. Here's how you can limit the effect on your operations and bottom line:
|Policy service interruption-related requirements
It's vital for businesses to execute their business continuity plans and take emergency measures to address power loss — for example, making use of batteries and backup generators if safe to do so, and ensuring the safety of employees through evacuation plans, contingency work plans, and other means. But it's also important to understand any service interruption-related requirements in your insurance policy.
Your property insurance policy may provide coverage in the event of an extended power outage — which could be 24 hours or more, although this varies by policy. Coverage may include:
- Service interruption property damage: Costs associated with damage to property arising from loss of a utility (for example, damage to temperature-sensitive property as a result of refrigeration being lost).
- Service interruption time element: Losses directly arising from extra expense or business interruption.
In addition to power loss, other covered service interruptions could include gas, water, garbage removal, and telecom services.
But coverage will only be triggered following a covered event, such as property damage to a utility that provides service to your organization's location(s), as defined under the policy.
|Unique documentation
In order to properly file a claim, you will need to provide your insurers with specific information regarding:
- Distance limitations: Service interruption coverage grants often specify that the cause of loss must be within a certain number of miles or feet of an insured's premises.
- Overhead transmission and distribution lines: Many policies exclude losses arising from overhead lines. Without jeopardizing employees' safety, it's vital to quickly identify and document the true nature of your service interruption, including the type of equipment that was damaged and the specific cause of damage.
- Waiting periods: Most service interruption coverage requires a waiting period, or a minimum time of interruption — typically 24 to 48 hours — before coverage will respond. It's important to provide your insurer with a clear and accurate timeline of your disruption.
- Notice to the utility: Typically, an insured is required to notify its utility of any interruption. If this requirement exists in your policy, be sure to document the notification.
Power outages and other interruptions are an unfortunate reality in the wake of any storm. Regaining service and recouping your loss will be essential to your recovery from Harvey. Work with your insurance advisors to best ensure your claim proceeds quickly and efficiently.
Robert O'Brien, managing director of Marsh USA, Inc. is a senior property claims officer of Marsh's National Property Claims practice. This article first appeared on Marsh.com and is reprinted here with permission. Visit the Marsh Risk in Context blog for the original post.
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