Large-scale catastrophic events can have significant impacts on your business. The most obvious is direct damage to your facilities, which can also result in impaired operations. However, many secondary issues can have detrimental effects. Utilities (including power, water, sewer, gas, etc.) often become unreliable due to wind damage or flooding. Infrastructure can sustain damage, which impedes access to and from your facilities. Governmental or other civil authorities may issue orders that restrict access to your locations. Even if your business location is outside of a catastrophe-prone area, you can be impacted by a catastrophe if large customers or suppliers sustain damage, which hinders their production.

Catastrophic conditions often trigger additional ancillary coverages included in many policies. Frequently, these additional coverages have their own sublimits, specific deductibles or waiting periods. It is essential to review your specific policy terms and conditions. The following discussion is not intended to be a comprehensive review of coverages. Instead, use the following to provide an idea of what to look for depending on your circumstances.

Protection & Preservation of Property (Property Damage & Time Element)

An insured incurs costs to temporarily protect a property from an impending threat (for example, boarding up in advance of a hurricane). This impending threat may also cause a business to shut down, resulting in a loss of income. Issues to consider specific to this coverage may include:

• The costs generally need to be spent on insured property due to an imminent threat from an insured physical loss or damage and the threat must be considered temporary in nature.
• If the event ultimately does not materialize, generally, the deductible for the event that would have happened is applied to the coverage.
• There may be a stipulated recovery time for Time Element losses (for example, 48 hours before and after protecting property).

Ingress/Egress (Time Element)

Your property may not be accessible due to damage to roadways, bridges, tunnels or other infrastructure. This lack of access may result in Time Element losses. Issues to consider specific to this coverage can include:

• The prevention of access generally must be from physical damage of the type insured to property of the type insured and at an insured location.
• Whether the damage needs to be within a certain radius of an insured location.
• There may be a specific number of days the coverage is afforded for or there may be a separate sublimit.
• Whether access needs to be completely shut off or if partial impairment qualifies for coverage.

Civil/Military Authority (Time Element)

Authorities may restrict access to your facility, resulting in a Time Element loss. Issues to consider specific to this coverage can include:

• The order must be from physical damage of the type insured at an insured location or within a specified radius from the impacted location
• There may be a specific number of days the coverage is afforded for or a separate sublimit.
• Whether access needs to be completely shut off or if partial impairment qualifies for coverage.
• Whether there is a specified amount of time the order must be in place (Waiting Period):
  • For coverage to apply and is subject to a different deductible OR
  • That serves as the deductible for this coverage

For more information on hurricanes:

Hurricane Preparation and Recovery | Claims Guidelines

Hurricane Preparation | A Guide for Businesses, Homeowners and Boaters

Hurricane Preparation and Recovery | Claims Guidelines for Condo Associations

Property & Casualty Team