Superstorm Sandy was a catastrophe of gargantuan proportions. At its peak, it was about 1,000 miles in diameter. The financial losses from the storm are estimated to exceed $60 billion. In its aftermath, there were almost 8 million people without power, including thousands of businesses.
Many businesses were unable to operate, not because of direct physical damage, but as a result of damage to utilities away from their businesses which left them without power. In some cases, the power did not come back on for weeks. However, you don’t need a storm as significant as Sandy to experience an off-premises power failure. The derecho in June 2012 knocked out the power for days in the Midwest. And these losses can happen at any time of the year – ice storms can knock down power lines miles from a business and keep the business shuttered for days. Or sometimes it could simply be the result of damage to a transformer down the street.
The potential financial loss resulting from an off-premises power failure can be detrimental to the survival of a business. Without the proper business insurance coverage, businesses may not reopen despite the lack of direct physical loss to the property.
The standard business insurance policy does not provide coverage for financial losses resulting from a business shutdown due to the interruption of utilities away from the place of business. However, you can endorse your business policy with coverage for “off-premise power interruption” for both direct damage and business interruption coverage of your business. Endorsement options for off-premises power coverages include the interruption of a power supply, communication equipment, or other utilities. Coverage is also available for the loss of temperature-sensitive goods such as frozen foods.
To determine which business coverage and endorsements are best for you, contact your independent insurance agent to discuss your exposure to off-premises interruptions of your business.
The coverages described here are in the most general terms and are subject to the actual policy conditions and exclusions. For actual coverage wording, conditions, and exclusions, refer to the policy or contact your Central agent.