Businesses of all industries rely on utility providers to supply the power, water, gas, telephone, and Internet service they need to operate. Any kind of major utility delay or disruption can create significant logistical and financial problems for businesses while they wait for their service to be restored.

Utility disruptions can be a costly problem for companies, so it's important to make sure your business has some form of protection available if utilities are interrupted. In today's Aegis blog post, we discuss how utility outages can impact businesses and what kind of financial protections are available.

Utility Outages Make a Big Impact

When companies can't operate because of utility disruptions, it can have a ripple effect on all aspects of the company. The loss of basic utilities directly impacts business owners, employees, customers, and even vendors.

Utility interruptions affect three main areas of a business:

• Reduced service and operations
• Spoiled raw goods and inventory
• Lost customers and cancelled orders

Retailers can't open their doors or process sales if they have no power, restaurants legally can't open without running water, and power outages can lead to spoilage of refrigerated and frozen goods and inventory. In addition, businesses can lose customers, product orders, or even important vendor deliveries when utilities are disrupted.

Does Business Interruption or Business Property Insurance Help?

Business Interruption Insurance works by covering the loss of income due to covered events such as theft, vandalism, fire, hail, or windstorms. Companies can then use those funds to cover their business-related expenses such as rent, mortgage payments, taxes, payroll, and utilities.

Business Property Insurance covers losses of business property due to fire, windstorms, hail, theft, or other covered events. The policy allows companies to repair damaged buildings, and repair or replace furniture, outdoor signs, equipment, tools, and more.

Companies are usually required to carry Commercial/Business Property Insurance, and many also carry Business Interruption Insurance in case of disaster. However, neither policy directly covers damages or losses related to utility disruptions.

So How Can Businesses Be Protected from Utility Disruptions?

Although a utility disruption can be hard for a business to recover from, owners can have financial protection when this type of disaster strikes. Utility Interruption Insurance is an insurance endorsement that covers losses specifically from utility interruptions off premises, such as a wind storm, water main break or gas leak.

However, in order to have these endorsements added to a business policy, companies must already have Commercial Property Insurance and/or Business Interruption Insurance in place.

Utility services – Time Element: This endorsement is an extension of basic Business Interruption Insurance and can cover losses from event such as winds breaking down power lines or water mains off-site. Businesses can be paid for the loss of income and expenses, up to a predetermined time limit or until the utilities are restored.

Utility services – Direct Damage: An extension of Commercial Property Insurance, this endorsement provides financial protection against damages to the property resulting from an interruption of any of the utility services named in the policy as a result of a covered cause, such as a windstorm. For example, a lightning strike off-site that causes a power surge can damage the machinery and computer equipment of a business.

These policy endorsements may or may not include damages related to overhead transmission lines, so it's important to discuss these with your insurance agent.

How Aegis Insurance & Financial Services Can Help

Aegis is a proud provider of Commercial Insurance solutions for businesses across the Gulf Coast, and strives to ensure that business owners have the coverages they need to quickly and fully recover if disaster strikes.

Our team of Commercial Insurance specialists can help you identify any gaps in insurance coverage, such as Utility Interruption endorsements or other policies, and create a portfolio tailored to your unique business needs. We offer top-quality, reliable coverage options all at competitive rates.

For more information about Utility Interruption coverage and which endorsements are the best fit for your business, contact Aegis today at 713-850-7622 or fill out our online form to request a free quote!