A commercial property insurance policy is reliable enough to handle direct loss to a business’s structures, equipment and related property. However, what happens when weather conditions turn mean and cause indirect damage by knocking out utility services? Items could be harmed by heat-induced transformer breakdowns; or fallen power lines, including compressors, motors and switches, at a business could result in food spoilage. Equipment damage may also occur due to an accidental, sudden loss of power. Power surges may harm expensive equipment. A commercial property may exclude coverage for loss that involves the failure of utility services. Therefore, a business is vulnerable to utility failure or interruption of any type that occurs away from its business location.
Fortunately, a business may buy additional, optional coverage to protect against utility service-related losses. A company usually has the option to buy the type of coverage it needs, such as services for water, telephone/communications (either including or not including land lines), gas and electric power. Further, a company has the option to protect different classes of property, what business locations to insure, type of property (the firm’s own property and/or property that belongs to others, such as customers), and the sources (perils) of loss covered.
Such coverage forms usually define the utility services; perhaps using language similar to the following:
- Water Supply Services are the pumping stations and water mains that supply the covered premises.
- Communication Supply Services refers to telephone, radio, microwave or television services that are included as covered property but coverage is not limited to only that property. The only specifically excluded communication property is a satellite. Overhead transmission lines may be included or excluded, depending on the manner in which the schedule is completed.
- Power Supply Services means five specific types of property used to supply electricity, steam or gas to the scheduled property. The types of property are generating plants, switching stations, substations, transformers and transmission lines. The transmission lines may be included or excluded, depending on the manner in which the schedule is completed.