Off Premises Utility Coverage

Can your business afford to go several weeks without power, only to find out that

your financial loss isn’t covered by insurance because the power outage source occurred

off your business premises? While standard commercial property insurance provides

reimbursement for loss due to business interruption caused by damage to the insured

premises, it’s another story if the suspension of operations is a result of an off-premises

problem, such as a downed power or phone line, blown transformer, or burst water

pipe, located down the street.



Off premises utility coverage, also referred to as off-premises power coverage or

utility services interruption coverage, provides coverages for financial losses

that occur to loss of gas, telephone, water or power services due to damage that

occurs at a location other than your own business premises.



Because there is no direct damage to covered insured property, but damage to another

property which results in your loss of power/utility, most common commercial property

insurance policies don’t provide for loss of income for this situation. Since this

type of coverage is typically excluded from other insurance policy, this add-on

endorsement is critical in order to be fully protected.



Loss of utility service to your business premises caused by off-property incidents,

like downed telephone lines, lightening strikes at a pumping station, or transformer

malfunction due to vehicle strike can occur at any time. In order for off premises

utility coverage to apply, the damage must be caused by a covered peril, like a

windstorm or fire, to property not on the insured’s premises. Utility service interruption

coverage or off-premises power coverage vary as far as what utility services are

included, whether transmission lines are covered, and the time factor of the loss




Off premises utility coverage apples to:



Utility Services:



  • Water Supply: Water mains and pumping stations that supply water to your coveredpremises


  • Communication Supply: internet, telephone, radio, microwave, television


  • Power Supply: transformers, transmission lines to supply electricity, gas to yourproperty


Power outages are a very real threat to business — one that can cost tens of thousands

of dollars in lost business when the operations are interrupted. Prudent business

managers make sure they are protected against the very real risk of a utility or

power outage that may occur at some location other than their own.