What Would You Do If You Had No Power? Dovetailing Exposures with Insurance Coverage

A client relies on power to satisfy customers and generate revenue. Their current did not have enough coverage to protect them from disaster. KMRD pursued higher limits, questioned endorsements, and negotiated restrictions off the policy.

The 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 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.”

Our Response

We then explained his insurance program included coverage for business interruption as a result of an off-premises utility failure.  However, like many policies, this coverage was sub-limited. In his case, it was only $10,000.  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 from the carrier.  This was achieved for no additional cost.

We followed up by asking the question “Is the building’s power supplied by an underground line or an above ground line?” He said the power was coming from an above-ground line. Unfortunately, the policy did not apply to above-ground transmission lines. In this case, we were able to negotiate the removal of this restriction from the policy for no additional cost.

The Results

Our client can concentrate on their core business with peace of mind this scenario was explored and addressed in both their insurance and risk management programs.

KMRD identified the risk then re-structured their insurance to fit their needs for no additional cost. That’s the KMRD difference.