As part of their business continuity planning, businesses also need to analyze insurance policies to see if they would be covered for income losses because of internet outages stemming from storms and other disasters, said Daniel B. Odess, president of GlobalPro Recovery, a construction and insurance specialty firm in Coral Gables.
He said many policies require — or the insurance companies will argue — that the business has to have sustained a direct physical loss or damage to the covered property in order to trigger coverage of loss of income.
“It’s a complicated issue,” Odess said. “It depends on the language in your policy in what constitutes direct physical loss or damage and what triggers coverage in the business income portion of your policy.”
He pointed to the aftermath of the BP oil spill as an example. Beach hotels might not have had oil on their property but were affected by tourist cancellations and the subsequent loss of income. Some were able to recover income losses, however.
There are other nuances in business insurance policies for tenants vs. property owners and some policies don’t cover business losses in the case of wind damage. There might be coverage for income losses in other areas of the policy such as what’s called civil authority — curfews, mandatory evacuations and roadblocks could all attribute to a slowdown or stoppage of your work, Odess said.
“It is a case by case basis and it really does require an expertise to fully understand,” he said. “Just because your broker or agent told you there is no coverage doesn’t mean that it is true.”