Cut Off After the Storm: How Access to Your Location Can Impact Your Bottom Line

What happens when the effects of a violent storm block customers and suppliers or even your employees from accessing your business? Or when civil or military authorities enforce a curfew or area closure before, during, or after a storm that impairs access to your location?

Hurricane Matthew and resulting flooding caused a tremendous amount of damage, including rendering roads and bridges impassable or washing them away entirely, downing powerlines and trees, and causing structural integrity issues. Many organizations are now asking questions about business interruption risks, particularly for ingress/egress and civil authority. These extensions to the time element coverage of a property policy have several different conditions and requirements that should be carefully reviewed.

When Access Becomes an Issue

 Time element coverage can help you stay afloat as you recover from a disaster. Two main components of time element coverage are:

• Business interruption: Covers the loss of income resulting from a covered loss that interrupts your normal business operations.
• Extra expense: Covers the increased costs to operate your business resulting from a covered loss that interrupts your normal business operations.

There are several extensions of coverage within time element, including ingress/egress and civil authority.

For example, if damage from a covered peril prevents or impairs access to and from your business, you may have an ingress/egress claim. Or if access to or from your business is prevented or impaired due to an order by a civil or military authority that causes you to lose income because of the order, you may also have a loss of income claim.

What You Can Do

Ingress/egress and civil authority require several conditions to trigger coverage, which can vary among policies. When reviewing your specific coverage, consider the following questions:

• What is the trigger for coverage?  Does it require damage or the presence of a covered peril?
• Are there distance limitations?
• Is there a waiting period or time qualifier for coverage to apply?
• Is there a time limitation during which coverage applies?

Before a catastrophic event impairs access to your business, it’s important to:

• Know when coverage for ingress/egress is activated.
• Document losses, including evidence of flooding or an order from local officials not to access the property.
• Understand that civil authority losses will only be covered if there is an actual order not to access the affected property. If it is merely suggested that you stay away, it likely will not be covered.

Ingress/egress and civil authority risks — like other natural catastrophe-related risks — can be difficult to manage. Before a storm strikes, work with your insurance advisors to understand your exposures and property policies to ensure you are ready and protected.