Issue
We asked a client in the service business, "What would happen if the power station down
the street failed?" The client said, "It would be devastating to our business. We could
not operate without any power. Therefore, we could not generate revenues and would most likely
lose customers. We would need to send everyone home and file a business interruption claim while
we made arrangements for either a new facility or an expensive generator."
Result
We then explained to the client that his program included coverage for business interruption
as a result of an off-premises utility failure. However, like many property policies, this coverage
was sub-limited. In his case it was only $10,000. Therefore, our next question was, "Is $10,000
enough for you to rent a generator to fuel your building until the power station is repaired?"
The answer was no and therefore we pursued higher limits for this client.
We followed up by asking the question, "Is this building's power supplied by an underground
line or an aboveground line?" He said the power was coming from an aboveground line. Unfortunately,
the endorsement that provided the coverage did not apply to aboveground transmission lines. In
this case we were able to negotiate the removal of this restriction from the policy.
Value
Due to our diligence process, our client can concentrate on their core business with peace of
mind that every potentially harmful scenario was explored and addressed in their Risk Management
Program.
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