Can Your Inn Function Without Electricity?

What would happen to your inn business if, through no fault of your own, no electricity was available? What if the power outage happened during a holiday weekend or on a weekend when you had a wedding booked?

40,000 vacationers were recently forced off the Outer Banks, the popular North Carolina vacation spot, due to lack of power. The power outage was caused when a construction company accidentally severed both the main power line and the back-up power line to several of the islands within the Outer Banks. In other situations, inns have been without power or water due to a storm that damaged power lines or municipal power-generating equipment.

Depending on the amount of time without power or water, some inns could have a significant loss of income. A week without power could mean not only a 7-day closure, but also reduced business in the weeks to come. Reservations are often canceled or not made due to the uncertainty of when power or water will be returned to the property.

Can insurance be purchased for a man-made catastrophe like this? Fortunately, yes—but typically you must specifically request it. The kind of coverage an organization would need to recoup their lost income from an outage like this is called “off-premises utility service interruption coverage.” While most loss of income claims are limited to damage that happens to your place of operations, this additional coverage can cover an inn’s loss of income due to power or other utilities not being provided. This endorsement can include or exclude coverage for damage to overhead power lines.

Many insurance companies do charge specifically for this coverage, so if you have not requested this coverage, you may not have it. We encourage you to contact your Merriam representative if you want to discuss your need for this coverage and find out what the additional premium would be for this protection.

It is much better to think through a worst-case scenario now, even if it never happens, than to have to work through a catastrophe without proper protection.

Can Your Inn Function Without Electricity?

James Dick, CPCU, AAI