Obscured by the hurricanes that brought the Caribbean, Florida and Texas, Mexico hit its own natural disaster earlier this week with 7.1 earthquake. Our hearts and prayers go out to those who suffer the earthquake.
Although most US companies, saving them with chess zone offices, were physically affected by the events in Mexico City, these companies may still suffer from quake-related financial losses. This can be caused by, among other things, dependence on suppliers in Mexico, the use of transport that flows through Mexico, or communication and logistics that take place in or through Mexico. Although the full impact of the earthquake is not known for months and years, it is worth a reminder that companies should take rapid action to identify potential insurance to mitigate any financial losses.
International and global transport systems and companies are interdependent. Damage to one has a ripple effect that affects others. Consequently, disruptions that began locally in Mexico can lead to disturbances and delays worldwide, as airlines, shipping companies, railway operators and trucking companies are increasingly affected. These effects will have short-term consequences of increasing the manufacturing, delivery and distribution costs of products that utilize international and global distribution routes. They can also affect long-term profits. In both cases, there is insurance cover for financial loss caused by damage to the property of others where the insured business is based on that property for its own normal business. Such protection layers are usually found in the following parts of your commercial property insurance:
A. Possible business interruptions
Liability limitation of professional injuries generally occurs in four circumstances where there is a financial loss arising from a business interruption: (1
In any case, physical damage to property has occurred elsewhere, away from the policyholder's own coverage sites. In order for coverage to exist, many policies require that the damage is of a type that would itself be covered by the policyholder's own property insurance, even if this limitation is not always present. If the insured business has cover for damage to the earthquake, then quota interruptions for business interruptions are available where loss is caused by chess-related damage to a customer or supplier. Similarly, if the policyholder retains loss of income due to remote damage caused by the earthquake, the policyholder's intended business interruption will apply if the policyholder has coverage for the subsequent cause of loss.
B. Any additional costs
The scope is also available for any additional costs incurred to mitigate or avoid a covered quota interruption. For example, where (a) a Virginia policyholder is dependent on a manufacturer of constituents for his product, and (b) the supplier maintains damage to his manufacturing plant in Mexico, resulting in a suspension of his supply of components, which may cause The Virginia company receives replacement parts from an alternative supplier in Hong Kong at a higher cost, as the coverage may be available for "additional expense" that arises to obtain the more expensive alternative components.
C. Ordinary business interruptions
To the extent that a company suffered physical damage on its own property, a requirement for ordinary insurance interruption may also be available. This coverage, which also acts to insure the insurer that no damage or interruption has occurred, generally requires (a) loss or damage to covered property, (b) a necessary termination of the business, (c) (d) resulting in loss of income or profit during the recovery period.
Significant, since the necessary elements clearly illustrate, the business interruption coverage will be available only where the damage arises to the policyholder's own covered property. For the typical business that is affected by the recent and developing events in Mexico, it cannot therefore be a profitable recovery protection for ordinary business interruptions.
D. Service interruption
Many international and global companies or their subsidiaries operating in Mexico may also have been directly affected by the outbreaks caused by power, water and telecom. When such disturbances result in financial loss or require the insured company to incur additional costs to maintain regular business, this loss or expense is often covered under available service interruptions.
E. Restrictions due to civil authority order
The scope is also available where access to the company's property is limited by an order from a civil or military authority. Contrary to the triggering event for business interruption, some courts have argued that physical damage to insured premises is not required to rely on the authority's coverage, as long as access to insured premises or to property used by the insured for a fee is prohibited. There are many types of civil authorities' orders, including orders that close or prevent access to office buildings, production facilities, ports and airports, financial exchanges and navigation waters. Any of these types of orders may trigger an insurance claim. Examples may include loss caused by evacuation and loss caused by inability to access ports.
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Companies with potential or actual losses should immediately assess their cover and any qualified loss. Failure to do so may result in overlooked loss or cost being overlooked or forgotten. This includes (1) prompt review of all insurance policies, including third party policies that may extend coverage to their benefits, (2) document suspicious business losses and additional costs, and costs for preparing any claims, as such expenses may also be covered and (3) comply with all policy conditions, such as notice and evidence of loss needs and, if necessary, negotiations with insurers to obtain exemptions and toll agreements
. Companies should also take the necessary measures to mitigate the losses, including attempts to obtain all necessary substitute materials. Insurance policies usually include provisions that require the policyholder to make reasonable efforts to mitigate any or potential losses and failure to do so may compromise coverage.
Finally, a company should put together a team of qualified professionals to help prepare and present their claim. Insurance companies use auditors, insurers and lawyers to represent their interests against their policyholders. It is therefore clear that the policyholders are prepared to present their claim in the best possible light. Hunton & Williams Insurance Guarantees are well known in the corporate income and additional cost intricacies and are available to help policyholders with any claims or issues they may have.