Companies should intensify their risk management plans for power outages in extreme weather, including scrutiny of insurance coverage, as climate-related disasters are increasingly raising concerns about the tools' ability to sustain power, experts say. Data losses can lead to significant claims and trigger insurance disputes after interruptions, they say.
The winter storm and freezing that hit Texas and the south earlier this year and the forest fires in many states, especially in the West, have underscored the need to review the company's continuity plans and coverage for interruptions.
An increase in the frequency of extreme temperatures leads to more power outages, says Maryann Johnson, Philadelphia-based senior real estate and energy claims manager at Beecher Carlson Insurance Services LLC, a unit of Brown & Brown Inc.
"Every business is different, but all companies are affected, "Johnson said.
Depending on their size and resources, companies should consider having reserve power generation in place or the ability to connect temporary power, if they can get it, she said.
The Texas Winter Storm, that hit February was a two-time event, said Jonathan Price, senior director, risk and insurance, at Main Event Entertainment Inc., a Dallas-based bowling and indoor entertainment chain. “We had a hard time getting to our places due to road conditions. We were also affected by the fact that we had no power when we were ready to use. "
Relying on contingency plans and communications is crucial," he said. "For us, the best risk management strategy is not to worry about product loss or increased labor costs during the crisis, but to communicate with our guests to make sure they come back for the experience they originally came here for."
Main Event Entertainment has service interruption coverage and is in the middle of submitting its analysis of income losses to its insurance company, Price says. Where the company had physical damage to its locations, "it is clearly based on the policy that it is covered and that the subsequent business interruption is covered," he said.
Some of the company's sites did not have physical damage but had power or power loss. "These are issues that we are still evaluating with the insurer, but we expect there to be coverage for that as well," Price said.
In the event of a power failure, standard interrupt coverage would not necessarily meet the requirement. , said Gary Marchitello, chairman of Willis Towers Watson PLC's North American real estate team in New York.
A company would need to have service outage coverage or coverage abroad. Such coverage usually has a sublimity of up to $ 5 million, $ 1
Policy formulations can vary and have different conditions, says Johnson. "Companies are always facing an uninsured loss, and at least it will be their deductible, but it can also be the whole event if the power outage is not the result of something covered by the policy," she said.  In addition, policies usually include waiting times, which can be 24 or 48 hours, Johnson said. "The wait means you have to be without that power for so long before coverage is considered under the policy," she said.
Rhonda Orin, managing partner at Anderson Kill PC, said companies should ensure that they have adequate data loss coverage that stands alone and "does not depend on anything that could end up excluding data loss if it comes from a power outage."
Power outages can damage the warehouse depending on operations and cause damage to property if a fire or other event occurs in connection with the power outage. "Almost always, no matter what business you run, it can affect your computers," Orin said.
Sudden interruptions and rolling interruptions are different; one is an accident and the other is intentional, she said. "Politics covers accidents, but intentional things can be extremely closely related to them," Orin said.
When an intentional measure is taken, the coverage depends on the policy language, she said. "Before the peak hurricane season, companies should think about what their claims would look like if a Category 3 hurricane hits," said Vince Morgan, a partner at Houston-based law firm Bracewell LLP. "Are there any weaknesses or gaps in the coverage?" he said.
If there is a loss, companies must gather their strengths to cover and track expenses and lost sales and begin the claims process as soon as they can, Bracewell said.
Some policyholders in the Texas storm could not get power, while others could, but the cost increased by 3,000 times its normal rate, he said. “Some companies had to buy it and try to protect their properties from damage. It should also be covered. Any expenses you reasonably undertake to protect property from further damage can usually be recovered under commercial real estate policies, he said.