Typically, hurricane season runs from May 15th to November 15th of any given year. Some of the lessons of SuperStorm Sandy are that you don’t have to be on the coast to suffer extensive damage to homes, commercial property and the loss of income associated with business closures and the resulting loss of earnings.
Many people continue to struggle from the effects of this storm and many businesses are nowhere near back to normal functioning. Off Premises Utility Services coverage was one of the limited means of recourse for those suffering damages from Sandy and for the loss of income sustained as a result of losing power. This coverage provided for losses due to lack of incoming electricity caused by damage from a covered cause (such as fire, windstorm or flood if coverage was purchased) to property away from the premises—usually a utility generating station. The coverage is also referred to as “off-premises power coverage.” However, it is important to remember that such coverage is not provided by standard property insurance policies and is only available by endorsement. Utility service interruption coverage endorsements vary widely as to what utility services are included, whether both direct damage (damage to property) and time element loss (loss of earnings) are covered, and whether addition, not all business income coverage is the same.
Damage to property, ensuing power interruptions and road blocks and/or closures can force a business to cease operating. The absence of personnel and suspension of operations can cause overall financial effects not contemplated by traditional coverage. Especially in cases where damages are caused by heavy rains, rising tides, and heavy winds, without the proper coverage, you could find yourself out of luck and out of business quicker than you ever imagined.
The best way to avoid catastrophe is to have a plan. We here at Petschauer followed our Disaster Recovery Plan during “Sandy” and it made all the difference to our customers and to the continuation of our business operations. By a pre-arranged disaster plan, we all knew what was expected of us and how to swing into action. We were able to work from our homes using our cellular telephone to service customers, report claims, counsel our clients and get restoration underway whenever and wherever possible.
Nobody, not even the meteorologists, can predict with complete accuracy the extent of the damages caused by wild weather conditions. They can, however, issue hurricane, tornado, coastal flooding watches, warnings and advisories all of which can help to better prepare us for approaching deleterious weather conditions. However, once the warnings are in place, insurers generally issue moratoriums against binding any new coverage until after the storms have passed. So, the best offense is truly a good defense or in this case a set of sensible, comprehensive planning which includes making sure to purchase those insurance coverages that can actually make a difference in times of disaster.
By Karen Skoler, CPCU