On February 14th, 2017 a massive six-alarm fire destroyed a historic three-storey athletic club in Toronto and forced the evacuation of many adjacent buildings. While it took 520 firefighters over three days to successfully prevent the fire from spreading to other buildings in this high-density area, the adjacent buildings suffered smoke damage and interruption to their businesses. An event such as this begs the question: Is your organization properly protected to ensure your business can recover from a similar event?
While there are many event and insurance coverage variables that an adjuster examines when presented with a claim arising from an adjacent building incident, some key extensions that should be written into your property policy include:
Business Interruption Insurance
Companies insure against building fires, storms, flood/water escape, vandalism and liability claims but in addition, businesses should purchase insurance to protect their financial loss to business income. Business Interruption Insurance pays for loss of income (profits and/or rents) and the continuing operation expenses that result from an insured loss, over a pre-determined indemnity period. It is very important to consider the indemnity period when arranging this coverage, or the length of time after a loss that you determine would be needed to resume normal business operations.
Ingress & Egress
Ingress / Egress is a common extension within the Business Interruption section of a Property policy. If ingress or egress from your business is prohibited as a direct result of an insured loss to a neighboring building this extension will enable you to make a claim under your property policy. This extension can provide up to 30 consecutive days of coverage depending on the carrier. For business interruption claims, coverage will typically begin 72 hours after access to the property has been interrupted; this is commonly referred to as a waiting period and essentially acts as a deductible mechanism.
Interruption by Civil or Military Authority
Interruption by Civil or Military Authority is another common extension that is included with the Business Interruption section of a Property policy. This extension provides insurance on an actual loss sustained basis for loss of business income and necessary extra expenses that are caused by the action of a civil or military authority that prohibits access to your premises. If civil or military authority interrupts access to your business as a direct result of an insured loss to a neighboring building that you do not insure, you can make a claim under your property policy. Again, it is important to ensure you have at least 30 days of coverage. Coverage will typically begin 72 hours after access to the property has been interrupted.
INTECH provides in-depth reviews of all lines of insurance coverage to ensure your business is protected.