Can your business afford to go several weeks without power, only to find out that
your financial loss isn’t covered by insurance because the power outage source occurred
off your business premises? While standard commercial property insurance provides
reimbursement for loss due to business interruption caused by damage to the insured
premises, it’s another story if the suspension of operations is a result of an off-premises
problem, such as a downed power or phone line, blown transformer, or burst water
pipe, located down the street.
Off premises utility coverage, also referred to as off-premises power coverage or
utility services interruption coverage, provides coverages for financial losses
that occur to loss of gas, telephone, water or power services due to damage that
occurs at a location other than your own business premises.
Because there is no direct damage to covered insured property, but damage to another
property which results in your loss of power/utility, most common commercial property
insurance policies don’t provide for loss of income for this situation. Since this
type of coverage is typically excluded from other insurance policy, this add-on
endorsement is critical in order to be fully protected.
Loss of utility service to your business premises caused by off-property incidents,
like downed telephone lines, lightening strikes at a pumping station, or transformer
malfunction due to vehicle strike can occur at any time. In order for off premises
utility coverage to apply, the damage must be caused by a covered peril, like a
windstorm or fire, to property not on the insured’s premises. Utility service interruption
coverage or off-premises power coverage vary as far as what utility services are
included, whether transmission lines are covered, and the time factor of the loss
covered.
Off premises utility coverage apples to:
Utility Services:
- Water Supply: Water mains and pumping stations that supply water to your coveredpremises
- Communication Supply: internet, telephone, radio, microwave, television
- Power Supply: transformers, transmission lines to supply electricity, gas to yourproperty
Power outages are a very real threat to business — one that can cost tens of thousands
of dollars in lost business when the operations are interrupted. Prudent business
managers make sure they are protected against the very real risk of a utility or
power outage that may occur at some location other than their own.
