POWER OUTAGE Property Insurance Coverage

According to the Official website of the Department of Homeland Security

Extended power outages may impact the whole community and the economy. A power outage is when the electrical power goes out unexpectedly. A power outage may:

•Disrupt communications, water, and transportation

•Close retail businesses, grocery stores, gas stations, ATMs, banks, and other services

•Cause food spoilage and water contamination

•Prevent use of medical devices.

These events may trigger a loss of income for business owners, offering opportunities for recovery under Commercial Property policies that include “property damage” coverage.

Typically, “property damage” coverage includes “physical loss or damage to covered property” referenced in the policy’s Declarations section. “Property damage” must result from any Covered Cause of Loss, such as a fire or windstorm, typically included as one of the policy’s “named perils.” But, such coverage includes not only direct loss but loss of use and functionality of the covered property.

Many Property insurance policies also include an exclusion for “loss or damage caused directly or indirectly by . . . Utility Services.” Nonetheless, if “property damage” coverage exists, it will include expenses the policyholder pays to mitigate loss or damages.

The best solution is to secure Power Outage Spoliation insurance coverage. It covers loss caused by changes in humidity or temperature resulting in interruption of electrical power. Absent such coverage, careful review of the facts creating a power outage loss may lead to insurance coverage.

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