The role of a risk manager within an organization has certainly changed over the years, taking on additional responsibilities as exposures continue to change. At its core, sound risk management consists of identifying the risk, analyzing and evaluating it, appropriately handling the risk, and then monitoring and reviewing the results. It’s a continuous cycle for risk managers in any industry.

Often times, however, those risks are outside an organization if its operations rely on another entity. What would be the financial impact to your organization if your key supplier for a particular component was shut down? Would you be able to continue operations?

The Insurance Services Office (ISO) Business Income Coverage Form CP0030 states it will pay for loss of business income due to a suspension by a covered cause of loss if the suspension was “caused by direct physical loss or damage to property at premises which are described in the Declarations and for which a Business Income Limit of Insurance is shown in the Declarations.” If your organization relies on a key supplier to provide a component part, to make a product, or handle the transporting of your goods, you could have a potentially significant gap in coverage if your supplier or contractor sustained a covered cause of loss at their own premises. Endorsing your business policy with the Business Income from Dependent Properties coverage endorsement could help prevent this gap.

The Business Income from Dependent Properties coverage endorsement provides for loss of income resulting from direct damage to property at locations the insured depends on to…

• Deliver materials or services,
• Accept the insured’s products or services,
• Manufacture products for delivery to the insured’s customers under contract of sale; or
• Attract customers to the insured’s business

Two of the best risk management practices are loss prevention and having a plan in place to mitigate any potential losses. Identifying and properly treating any risk exposures related to a reliance on third parties should be part of your planning process. Ask your independent agent about dependent business income coverage today.

The information above is of a general nature and your policy and coverages provided may differ from the examples provided. Please read your policy in its entirety to determine your actual coverage available.