When a business is interrupted from its normal operations due to a natural disaster, it loses income. Additionally, if a commercial building needs to be restored because of property damages, the company may incur extra expenses. As commercial insurance litigation lawyers, we have seen countless businesses interrupted from Hurricane Sandy as many were affected by utility outages, transportation shutdowns, and evacuation orders. So, what covers these businesses from extra expenses and loss of earnings due to business interruption?
Time Element Coverage
Most business owners have heard of business interruption insurance but are unaware of time element coverage. Time element coverage is basically insurance coverage tied to a period of time and should protect against interruptions in business. It covers elements such as extra expenses, business interruption, civil authority, utility interruption, ingress/egress, and much more. Time element insurance is generally measured by the interval of time that a business is interrupted.
For example, if your building was burned down in a natural disaster, you not only lost the building but you have incurred an indirect time element loss due to the lost income when your business was forced to shut down. When you have time element coverage, it covers the losses that occurred during that specific period of interruption until the business returns to its normal operations, as defined in the policy. Because extra expenses and business interruption occurred during a period of interruption, it is considered time element coverage.
A similar form of insurance coverage is contingent time element coverage. This coverage insures businesses for losses occurred due to interruption and extra expenses when a third-party—a supplier or a customer—has suffered property damages and physical loss. What this means is that if your business is dependent on a third-party, and that third-party’s property suffered physical damages causing you to not get your product, fulfill orders, or operate, then you should be entitled to recover your losses during that period of interruption. For example, if you had to purchase another product to fulfill your orders, you may have lost business and incurred a higher cost. If this occurred, you could pursue a claim for extra expenses and business interruption under contingent time element coverage.
If you sustained commercial property losses due to a natural disaster, please call a knowledgeable commercial insurance claim attorney for help understanding what coverage your business is entitled to prior to making your claim for losses. Also, if you need help negotiating with the insurance company to get the insurance claim payout that you deserve, please call the Voss Law Firm today at 888-614-7730 for a free consultation and also request a free copy of attorney Bill Voss’ book: Commercial Property Owners Must Read This BEFORE Filing an Insurance Claim.