Losing power, especially for an extended period, could significantly impact your restaurant business. An extended outage may produce damages from food spoilage losses to business income losses if unable to open or cook meals. Unfortunately, restaurants can suffer heavy financial losses from power outages. The right coverages on your Business Owners or Commercial Property Policy can help. However, they aren’t all automatically included in your policy, so let’s review the critical coverage to have so you aren’t unpleasantly surprised if you file a claim.
- Make sure your policy includes Spoilage coverage. The policy may apply spoilage coverage to your overall limit of Business Personal Property (BPP) if it also considers your food inventory BPP; or there may be a lower limit of coverage that only applies to property that spoils. You want to review your limits to make sure that they are appropriate to cover the total value of inventory you may have at one time and over the number of locations you have.
- Within that spoilage coverage, it’s crucial your policy includes Utility Services Interruption as a “Covered Cause of Loss” for Spoilage claims and that the “Utilities Interruption” includes interruption of power. Utility services interruption can apply to power, water, cable, or other utilities and are typically noted as to which coverage applies.
- Not only do you need to make sure that Utilities Interruption includes loss of power as a utility, but you also need to make sure that downed overhead powerlines are included as a covered cause of that loss of power. Many policies exclude downed overhead lines as a cause of loss for Utility Services Interruption unless specifically added to your policy, so it’s an important area to review.
- Business Income loss, due to loss of power, is a separate coverage you want to review. Like the property loss coverage of spoilage, Business Income loss, due to power outage, would be found under Utility Services Interruption, but as a separate coverage called “Time Element.” The coverage is for your loss of time to operate and make income because of the power outage. Like Utility Services Interruption for Spoilage, you also need to make sure the Time Element coverage includes interruption of power, and that downed overhead powerlines are a covered cause of loss for the power interruption. Time Element coverage usually has a deductible before the policy will kick in. Instead of a dollar amount, the deductible is a length of time, usually outlined by the number of hours. The standard deductible or length of time before a policy will respond is 72 hours, but policies offer shorter or longer deductibles too.
Losing power, especially for an extended period, could significantly impact your restaurant business. An extended outage may produce damages from food spoilage losses to business income losses if unable to open or cook meals. Unfortunately, restaurants can suffer heavy financial losses from power outages. The right coverages on your Business Owners or Commercial Property Policy can help. However, they aren’t all automatically included in your policy, so let’s review the critical coverage to have so you aren’t unpleasantly surprised if you file a claim.
- Make sure your policy includes Spoilage coverage. The policy may apply spoilage coverage to your overall limit of Business Personal Property (BPP) if it also considers your food inventory BPP; or there may be a lower limit of coverage that only applies to property that spoils. You want to review your limits to make sure that they are appropriate to cover the total value of inventory you may have at one time and over the number of locations you have.
- Within that spoilage coverage, it’s crucial your policy includes Utility Services Interruption as a “Covered Cause of Loss” for Spoilage claims and that the “Utilities Interruption” includes interruption of power. Utility services interruption can apply to power, water, cable, or other utilities and are typically noted as to which coverage applies.
- Not only do you need to make sure that Utilities Interruption includes loss of power as a utility, but you also need to make sure that downed overhead powerlines are included as a covered cause of that loss of power. Many policies exclude downed overhead lines as a cause of loss for Utility Services Interruption unless specifically added to your policy, so it’s an important area to review.
- Business Income loss, due to loss of power, is a separate coverage you want to review. Like the property loss coverage of spoilage, Business Income loss, due to power outage, would be found under Utility Services Interruption, but as a separate coverage called “Time Element.” The coverage is for your loss of time to operate and make income because of the power outage. Like Utility Services Interruption for Spoilage, you also need to make sure the Time Element coverage includes interruption of power, and that downed overhead powerlines are a covered cause of loss for the power interruption. Time Element coverage usually has a deductible before the policy will kick in. Instead of a dollar amount, the deductible is a length of time, usually outlined by the number of hours. The standard deductible or length of time before a policy will respond is 72 hours, but policies offer shorter or longer deductibles too.
The Last Word
There’s a lot that a Commercial Property or Business Owners’ policy can do to help Restaurants who suffer a power outage. Still, it’s essential to make sure that your policy is written correctly to include these vital coverages. Reach out to an InsureGood Advisor to discuss your risks and coverage options for your Restaurant today!
