Insurance Coverage for Power Outage Losses

Overview: The article describes that the first step in analyzing property insurance coverage for power outage losses is to determine whether there has been direct physical loss or damage. Indeed, property insurance policies insure only against risks of direct physical loss or damage to property insured under the policy, as this common policy form states: “We will pay for direct physical loss of or damage to Covered Property at the premises described in the Declarations caused by or resulting from any Covered Cause of Loss.” Property insurance policies provide coverage for power outage losses only where a covered cause of loss causes direct physical loss or damage to covered property. There would be no coverage if a power outage only shuts down the insured’s computers or production equipment. There are several boiler and machinery endorsements that provide coverage for certain power outage losses, but all of these require an “accident” to a covered “object” to trigger coverage. Finally, if a loss is covered, the amount of the loss must exceed the applicable deductible or waiting period. Property damage deductibles are typically a specific dollar amount. Business interruption policies either have a deductible expressed in dollars or a waiting period.

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Format: PDF | Size: 94KB | Date: Oct 2001 | Pages: 25