Business Income Protection: The Devil’s in the Details
After a sinkhole created a crater in the middle of Main Street in Springfield in early May, causing power outages and waterline disruption, several big businesses took a big hit. Local media reported that Tower Square and the Springfield Marriott were forced to shut their doors; the Marriott was forced to send guests elsewhere for several days.
Most businesses protect themselves from an income loss such as this with business interruption coverage. In general terms, this type of policy kicks in after a covered property loss, such as a fire or hurricane. Coverage gets dicey, though, when you have an off-premises power or waterline failure.
You may remember the October 2011 Nor’easter that dumped heavy snow across the region, downing tree limbs and causing power outages that lasted weeks in some areas. Many businesses were forced to close, and most looked to their business income coverage for relief. Unfortunately, most businesses were denied coverage due to the lack of what’s called Off-Premises Utility Interruption Insurance.
This coverage is an add-on to standard business interruption policies and protects a business when a weather event causes interruptions to utilities and communications services or water lines away from the business.
I recommend that business owners take a moment to assess their risk of loss in a catastrophe. Then take the time to ask your commercial lines representatives about income coverage and off-premises interruption insurance so you can make an informed decision.