Climate-Related Power Outages Raise Risk, Coverage Issues

Bracewell’s Vince Morgan recently discussed with Business Insurance the need for companies to step up risk management plans and review insurance coverage in light of escalating extreme weather events and related power outages. Business interruption exposures and computer data losses can lead to significant claims and trigger insurance disputes after outages.

Ahead of peak hurricane season, businesses should think about how their claim would look if a Category 3 hurricane hits, said Morgan. “Are there any weaknesses or gaps in coverage?” he said.

If there is a loss, businesses need to marshal their forces to respond and track the expenses and lost sales and begin the claims process as quickly as they can, said Morgan.

Some policyholders in the [February] Texas storm couldn’t get power, while others could, but the cost increased by 3,000 times its normal rate, Morgan said. “Some companies had to buy that and try to protect their properties from damage. That should be covered, too. Any expenses you reasonably incur to protect property against further damage is usually recoverable under commercial property policies,” he added.

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