Covering Your Business Against Interruption - Even if a hurricane doesn't hit your company directly, it can still inflict lasting damage

While the human suffering triggered by Hurricanes Harvey and Irma unfolded in real time on our TV screens, opening American hearts and wallets and triggering heroic volunteer rescue e.orts, the full extent of the economic damage will not be evident for some time. That impact is likely to extend well beyond the Gulf states to the U.S. and even global economy.

Major refineries shut down in Harvey’s wake, causing gasoline prices to spike. Many refineries sustained damage that led to chemical emissions. By August 31, the Texas Commission on Environmental Quality had received 56 preliminary emissions reports from petroleum and chemical companies, The Wall Street Journal reported. Production in many of those companies could be impaired for some time, affecting the supply chains of a wide range of products.

In the storms’ aftermath, businesses in the affected areas of Texas, Louisiana and Florida should be vigilant about pursuing insurance recoveries. That entails assessing not only the physical damage to their property but also income losses stemming from such varied consequences as flooded and blocked roads and bridges, interruptions of shipping and air transport, evacuations and closures by civil authorities.

Beyond the area of immediate impact, businesses suffering from supply chain disruptions throughout the U.S. (and by extension, globally), should look to their property insurance policies for contingent business interruption coverage, triggered when policyholders do not themselves suffer physical damage but still lose revenue due to the effect of property damage to a supplier or customer. Contingent business interruption is a standard provision in many property insurance policies, though many businesses are not aware of it.