Consider the devastation left in the wake of Storm Sandy and the more recent Northeast blizzard, the violent thunderstorms that plagued the Midwest and mid-Atlantic last summer. Here in Maryland it seems like spring will never get here. Extreme weather events can threaten the existence of many businesses. Notably, eleven weather events caused at least $1 billion in losses in 2012, which was also the warmest year in the United States since recordkeeping started in 1895. Businesses need to evaluate this risk and make a determination if transferring the risk of lost business income to an insurance carrier makes sense.
Business income is the lifeblood of any business, and some insurance carriers offer coverage to replace lost business income, cover employee wages and extra expenses associated with helping to keep them going. For example, The Hartford offers business income coverage which automatically extends coverage to interruption of computer operations at the scheduled premises. They also automatically extend coverage for continuing expenses, including payroll, for the period of restoration, up to 12 months.
Be sure to also review your policy for Off-Premises Utility Services Coverage. Without this endorsement there is no coverage if a utility service – power, water, communications, fails from a covered loss. Limits can range from $2,500 to $100,000. Deductible limits range too; however, the deductible is measured in hours, not dollars. Each business will have a unique need. A restaurant without power for seven days will not only lose revenue for those seven days, but also potentially loss perishable items. Yet a residential HVAC contractor may feel less of an impact. They may be able to still conduct business if they can quickly find a phone and connection to their computer system to monitor and respond to service calls.
The next time you review your business insurance policy, be sure to discuss with your agent if Business Income and Off-Premise Utility Services Coverages are right for your business.