We had questions come to us after the series of storms that hit Florida, the southeast, and Texas. The first of these deals with off premises loss of utility services. The basic Commercial Property Policy excludes loss or damage due to utility failure that originates away from the insured’s premises. Further, this exclusion applies when the failure occurs on the premises due to failure by equipment that supplies an off-premises utility service. Utility Service Interruption Coverage often referred to as “off-premises power coverage,” is an endorsement intended to close these gaps in coverage. It covers losses due to lack of incoming electricity to covered property caused by damage from a covered cause, such as a fire or windstorm. This endorsement, which can only be purchased in addition to an existing commercial policy, does not provide additional amounts of coverage; it simply covers the exposure left by the exclusion in basic Commercial Property policy. There is generally a time deductible and that is determined by the carrier. Commercial Property Insurance and business interruption insurance cover your costs if an unexpected event damages your property and forces you to close for a short time. However, they don't cover losses your business sustains from a utility interruption, which can result from events occurring off your premises, such as a wind storm, water main break or gas leak.
Basic business interruption insurance and property insurance can be expanded to include this coverage with two specific endorsements:
- Utility services – time element: This endorsement is an extension of basic business interruption insurance for off premises utilities loss. In the event winds break down a power line or a water main is broken, this coverage can cover your losses, including loss of income and expenses, up to a predetermined time limit or until the power or water service is restored.
- Utility services – direct damage: This endorsement is an extension of your property insurance, providing protection against damage to your property resulting from an interruption of any of the utility services named in the policy as a result of a covered cause, such as a windstorm for off premises utilities loss.
One of the factors to acquiring coverage is to show you have a basic plan for power loss. Contact me directly and we will get you started on a quote to cover this possible gap in your coverage.
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