Power Play Are you covered when the lights go out?

There's a small fire in the electric company'ssubstation, or a transformer blows, and power to your facility isknocked out for several hours. What will that mean to youroperation? For most companies, a power failure that lasts longerthan 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 andphysical damage that may not be covered by your basic property andcasualty insurance.

If your power goes out because of, say, a fire in your ownplant, your property insurance will probably pay. But to be coveredwhen the power goes out because of damage to an off-site facilitythat's not under your control, you need off-premises powerfailure coverage. Usually set up as endorsements to standardproperty policies, this insurance typically covers damages suffereddue to the loss of power, water and communication supplies becauseof an occurrence at another location. Rates vary, but you canexpect to pay $2.50 to $3.50 per $1,000 of coverage annually.

Not all such policies are created equal, however. Some coverphysical property damage only, some include electronic data, andsome also cover lost revenue. So shop wisely.