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Service Interruption and Business Income … Are You Covered?

When it comes to explaining the need for various types of coverage to a client, we are often stuck using hypothetical scenarios. Recent developments in North Carolina’s Outer Banks provide a real-time example of a sometimes confusing coverage, business income.

On July 27, PCL Construction drove a steel casing through an underground cable that supplies power to parts of North Carolina’s Outer Banks. As a result, vacationers left and residents were without power for about a week. This loss of power could not have come at a worse time for the businesses in this area. Based on last year’s tourism numbers, Hatteras Island businesses could have easily lost $2 million for each day of the outage, according to Dare County officials. Some businesses may be able to withstand the loss of revenues for this time, while other businesses face the real possibility of closing the doors for good unless they have insurance coverage for the lost revenue. 

What is Business Income Coverage?

A common coverage found under property insurance is business income. Business income coverage will pay the insured for its actual loss of business income sustained due to the necessary suspension of operations during the period of restoration. In order to trigger this coverage, a few things must occur. First, the business must suffer a suspension of operations. Second, that suspension must result from direct physical loss or damage to property at or within 100 feet of the listed premises. Last, the loss or damage must result from a covered cause of loss. If any of the preceding triggers are not met, coverage does not apply. In the case of the Outer Bank’s power outage, the second trigger has not been met since the damage to the underground utility occurred in the middle of the inlet.

As is often the case for uncovered losses, an endorsement is available to add coverage back for business interruption suffered from the loss of utilities. Coverage can be purchased to cover the loss of water, wastewater removal, communications and power utilities. Another option to the endorsement is coverage for overhead transmission lines for power and communications.

If you have questions about your business income coverage, a Scott Risk Advisor can help you evaluate the risks to your business and suggest coverage that is appropriate.

Written by Chad Duke

Chad is a Risk Advisor in Scott’s Raleigh office. He joined Scott in 2009 to assist in the growth of the Raleigh branch.

Call Chad at 919-341-0754 if you have any questions or need any additional assistance.

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Affordable Housing’s Economic Impact

Affordable Housing Apartment Building

The economic impact of affordable housing at the local level is significant. In fact, the development of affordable housing in communities has many short- and long-term economic benefits. This industry combines the investment potential of real estate development with the mission of helping low- and moderate-income individuals and families, while impacting the local economy through job creation and increased government revenue.

 Impact on Employment

One of the primary ways affordable housing positively impacts the economy is through direct and indirect job creation. In Virginia alone, it is estimated that from 1996-2016 266,135 short-term jobs and 10,245 long-term jobs were created due to affordable housing development, according to a report from the Virginia Housing Alliance. Another study released earlier this year, concluded that a total of 329,000 jobs were supported throughout New York State between 2011 and 2015 due to the construction or preservation of affordable housing units.  Read Full Story

Run-off Insurance A Necessity in Today's Market

Today’s merger and acquisition (M&A) landscape is hyper active. In 2016 alone, there were more than 12,000 M&A deals in the U.S. These opportunities often create significant financial opportunity for the purchasing and selling entities. Alternatively, during the same period corporate bankruptcies totaled over 46,000, revealing that many companies are facing significant difficulties.

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However, on a recent update to its recordkeeping webpage, OSHA indicated that the Injury Tracking Application (ITA) website will not be ready to receive electronic workplace injury and illness reports until Aug. 1, 2017, and has proposed Dec. 1, 2017, as the new deadline.  

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Cyber Risk: What Is Your Company Doing About It?

Businesses of every size and in nearly every industry are facing increasing cyber risk. Cyber threats that seemed far-fetched for many companies only a few years ago are very real today – as evidenced by the recent WannaCry ransomware attack that spread to over 150 countries last month. Results from the 2017 Cyber Risk Survey indicate that many businesses are not adequately protected and lack the knowledge and resources to prepare for, or respond to, a cyber-related incident.  

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