Insurance coverage Q&A: Incurred expenses and diesel fuel

When an insured uses a generator after a power outage, is that a business income expense?

PropertyCasualty360 editor’s note: Every claim is different, and some insurance policies can be difficult to interpret for unique situations. FC&S Expert Coverage Interpretation, the recognized authority on insurance coverage interpretation and analysis for the P&C industry, makes it simple to find credible answers to your complicated coverage questions. The questions have been edited for clarity and length. Credit: DNY59/iStockphoto.com

Reader’s question: The insured has coverage for business income and extra expense under form CP 00 30 10 12 and causes of loss — special form CP 10 30 10 12 endorsed with the utility services-time element CP 15 45 09 17 with power supply including overhead transmission lines coverage.

A windstorm causes damage to overhead transmission lines/power supply causing loss of power to the described premises. The insured had a generator that incurred diesel expenses when supplying power to the premises.

Are these diesel expenses incurred by the insured to avoid suspension of the operation fully covered under the extra expense coverage without being subject to any offset or deduction?

— Puerto Rico Subscriber

The business income form provides coverage for loss of income and expenses to continue normal operations, including payroll. Extra expenses incurred that the insured would not have sustained had there not been any physical damage are also covered.

We see no deductible in any of the forms. The only possible deduction would be a business income waiting period, and that only applies if there is a waiting period indicated on the utility services endorsement CP 15 45. The form lists the following:

B. Waiting period If a business income waiting period is indicated in the schedule, such waiting period begins at the time of interruption of utility service to the described premises.

As long as no waiting period is indicated in the schedule, then there is no deduction.

Related: