Power Play
Are you covered when the lights go out?
There's a small fire in the electric company's
substation, or a transformer blows, and power to your facility is
knocked out for several hours. What will that mean to your
operation? For most companies, a power failure that lasts longer
than just a few seconds can have significant consequences.
Production halts, phones stop ringing, refrigerators warm up,
heaters cool down--all of which translates to lost sales and
physical damage that may not be covered by your basic property and
casualty insurance.
If your power goes out because of, say, a fire in your own
plant, your property insurance will probably pay. But to be covered
when the power goes out because of damage to an off-site facility
that's not under your control, you need off-premises power
failure coverage. Usually set up as endorsements to standard
property policies, this insurance typically covers damages suffered
due to the loss of power, water and communication supplies because
of an occurrence at another location. Rates vary, but you can
expect to pay $2.50 to $3.50 per $1,000 of coverage annually.
Not all such policies are created equal, however. Some cover
physical property damage only, some include electronic data, and
some also cover lost revenue. So shop wisely.
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Jacquelyn Lynn is a freelance business writer in Orlando,
Florida.