When you own a business, a sustained power outage can lead to a world of problems. You probably thought about this when you were looking for commercial insurance quotes. If the lights go out and your equipment stops running, you need to know what your insurance will cover.
Standard Commercial Insurance Policies
Regardless of the cause of a power outage, any entrepreneur whose operations are paralyzed by the loss of electricity will soon learn the true cost. Equipment and inventory can be damaged, and often customers are prevented from buying products and services from you until the power returns. That can mean lost profits and the need to replace important components of your company.
Your standard policy will not cover the economic costs of the outage such as business interruption or lost profits; however, it will pay for the cost to repair property damage. It is important to note that you will only be covered for “direct physical loss or damage” to your premises or business structure. You would not be reimbursed, for example, if the power loss was caused by an accident that damaged a transformer blocks away from your building.
The Advantages of Utility Service Interruption Coverage
A long-lasting power outage may never happen to you, and count yourself lucky if it doesn’t. However, if it does, your business could be seriously crippled by the high costs of replacement and loss of production and customers. For that reason, it makes sense to protect yourself against a disaster that will hopefully never happen by purchasing utility service interruption coverage. This is a comprehensive, specialized policy that does more than simply help you out if your electricity is affected. It also comes to your financial rescue if you have serious problems with other utilities such as telecommunications, gas and water.
Types of Service Interruption Coverage
When speaking to your agent and getting commercial insurance quotes, be sure to specify which type of service interruption coverage you want. A time element endorsement provides coverage for a specified period of time, although it is still subject to exclusions that you should take note of before purchasing it. By contrast, a direct damage endorsement specifies the particular types of loss against which you are protected. Neither is comprehensive, so be sure to carefully contemplate your needs.
Don’t wait until disaster strikes to think about how to protect yourself in the event of a power outage or other utility failure. By then, it will be too late. Speak to your agent about your coverage options now, and you will not need to be scared of the dark.