Can Your Business Function Without Electricity?

Recently, 40,000 vacationers were 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. The governor of North Carolina declared a state of emergency, causing about 40,000 tourists to leave the Outer Banks earlier than expected.

The permanent residents of these islands, and the businesses they run, rely on steady tourist traffic to make their businesses viable. Most of these businesses are closed 3 to 5 months out of the year, so they must meet their year-round expenses by having a busy and consistent summer season. One restaurant owner said that each day he was closed he missed out on $5,000 to $6,000 in sales. His 25 employees, who make between $75 and $250 per day were also not earning their wages.

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 “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 organization’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 prepare for a worst-case scenario now, even if it never happens, than to have to work through a catastrophe without proper protection.

James Dick, CPCU, AAI

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