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Written by Adam Miller
What is Off-Premises Utility Coverage, and Does Your Business Need It

Businesses make plans and preparations all the time – like when to roll out new products or services, what kinds of ads to run, and what should be ordered from suppliers and vendors. But the best laid plans can often get derailed by one sudden problem: a major utility outage.

A lengthy utility outage can quickly disrupt all facets of a company's daily operation, from sales to production to customer service. It can result in substantial losses for business owners, without any financial help from standard Business Insurance policies.

Companies need to make sure they have Off-Premises Utility coverage added as an endorsement to their Business Insurance Portfolio. It can offer financial help when companies experience losses related to significant utility outages that occur off the commercial property.

In today's Aegis blog post, we'll look at all the different ways a company can be negatively impacted by an off-premises outage of utility services, how Off-Premises Utility coverage works, and why your business needs the coverage.

What Utility Outages Can Impact

To understand Off-Premises Utility coverage, it's important to first know what all a lengthy utility outage can do to a business financially. To start, a company without power typically cannot open or operate at all, meaning a loss of revenue until power can be restored.

Companies cannot safely welcome in employees and customers, or process sales and purchases without power. Restaurants, bakeries, and other food service businesses will likely face the loss and spoilage of their raw materials and cold inventory, and a water outage can also result in the loss of revenue.

In addition, a power outage can also lead to damaged equipment or machinery if power is cut mid production or if technology equipment doesn't have a chance to properly shut down. Also, businesses without power may not be able to properly communicate with vendors or customers, leading to future losses or irate customers.

How Off-Premises Utility Coverage Works

Off-Premises Utility coverage helps businesses by providing financial support when losses occur due to a covered event causing an off-site outage to a major utility, like water, power, or telecommunications. Covered events that can cause off-site outages include fires, lightning strikes, explosions, windstorms, or hail.

Off-premises utility coverages are endorsements to existing policies, so they can help with property damage, revenue losses, and additional expenses that arise from the utility disruption. Businesses can choose to have Off-Premises coverage protect against Direct Damage losses related to utility outages, as well as Time Element endorsements, which help with losses in income or extra expenses incurred.

Companies also need to determine which utilities are most important to the function of their business and make sure they have the Off-Premises endorsement needed to cover those properties. For instance, a retailer can go without water for a while but must have power to process sales. A restaurant can go without working telephone service but cannot operate at all without running water or power.

Why Your Business Needs It

Most businesses today don't have the financial means to cover a major loss of revenue, replacement of major equipment and tools, or the total loss of raw goods and inventory. Losing an entire day of sales and production can spell financial disaster for many small businesses, especially those still struggling to recover from the impact of the Covid-19 pandemic.

Off-Premises Utility coverage is an essential part of any Business Insurance portfolio for two main reasons:

  1. Companies today simply cannot afford major losses of revenue and property caused by lengthy outages.
  2. Businesses will only continue to experience utility disruptions and outages as our existing infrastructure ages, and natural disasters continue to increase in our region.

How Aegis Can Help

Rather than hope we avoid lengthy utility disruptions and outages, it's best to be prepared and have the financial protection in place to help businesses recover faster from major utility outages. Aegis Insurance & Financial Services can help your business identify utility service priorities and risks, and ensure that you have the coverage and endorsements needed to fully protect against damages and losses if disaster strikes.

Contact Aegis today at 713-850-7622 about our full range of Business Insurance policies and endorsements, or fill out our online form to request a free quote!

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