Boiler & Machinery / Mechanical Breakdown
Although you may not have boilers at your locations, there is an exposure to loss to certain equipment such as air conditioners, transformers, generators, electrical panels, refrigerators, centrifuges and other types of mechanical laboratory equipment.
Traditional personal property and business interruption forms exclude losses caused by electrical disturbance, power surge or mechanical breakdown unless a fire ensues, and then coverage exists only for the ensuing fire.
Building Code Updating
Even though you insure a building, the cost of repairing or reconstructing damaged buildings can far exceed estimates if the building must be demolished or upgraded to comply with laws relating to:
a) earthquake safety
b) handicapped access
c) life safety (e.g. sprinkler system)
d) other requirements
Your present coverage pays for “like kind and quality” but coverage for upgrade expenses is available.
Business Income, Contingent
This coverage would protect you for income loss or extra expenses due to damage to the premises of specified suppliers, customers or subcontractors by a covered peril. It may be purchased domestically or on a worldwide basis.
Business Income, Extended Period of Indemnity
Business Income typically provides coverage during the time it takes to repair the damaged premises. However, business may be slow in those first few months following completion of repairs or relocation, and loss of income may continue. Business Income coverage can be extended to pay some or all of that additional loss.
Business Income / Extra Expense
Business Income will pay for the actual loss of Business Income you sustain due to the necessary suspension of your “operation” during the “period of restoration”. Suspension must be caused by direct damage to your covered property caused by an insured periol. Coverage also applies to continuing expenses, such as payroll and rent, and extra expense that indemnify you for necessary expenses over normal expenses incurred during the “restoration period”.
Most property policies contain an exclusion for earth movement (other than sinkhole collapse), such as an earthquake, landslide or earth sinking, rising or shifting. Coverage for damage arising from these perils can be purchased through specialty carriers and is usually purchased using a “Difference in Conditions” policy. This policy will pick up coverage for perils normally excluded by the standard property contracts.
Earthquake Sprinkler Leakage
Property insurance policies have generally excluded the peril of earthquake. They have, however, often included coverage for leakage from overhead sprinklers caused by earthquake (Earthquake Sprinkler Leakage or EQSL).
Exhibition / Trade Show Coverage
This coverage may be purchased in conjunction with Transit and Any Other Premises coverage. It must be insured separately if the location of the Exhibition is outside the coverage territory on the property policy.
Most property insurance policies exclude flood damage. “Flood” is defined as “A) general and temporary condition of partial or complete inundation or normally dry land areas from 1. the overflow of inland or tidal waters; 2. the unusual and rapid accumulation or runoff of surface waters from any source; 3. mudslides (i.e., mudflows) which are proximately caused by flooding as defined above and are akin to a river of liquid and flowing mud on the surfaces of normally dry land areas, including your premises, when earth is carried by a current of water and deposited along the path of the current. B) The collapse or subsidence of land along the shore of a lake or other body of water as a result of erosion or undermining caused by wavers or currents of water exceeding the cyclical levels which result in flooding as defined in A) above.” The definition of flood includes the accumulation and runoff of surface waters from any source and is intended to provide coverage to something other than the back-up of sewers and drains. Back-up of sewers and drains coverage is available under most property policies. Coverage for flood is available through the National Flood Insurance Program and through specialty carriers.
Coverage must be specifically purchased for Business Personal Property outside of the U.S. and Canada.
The deductible (Self-Insured Retention) is relatively high and the cost varies based on the risk profile of the company. A specific application is required for a quote. The Integrated Risk approach allows for the incorporation of all property coverage within the program either on a primary basis excess of a sizable retention, or in excess of specified primary limits.
Off Premises Disruption of Utilities
Standard Business Interruption forms cover a direct loss of income and continuing expenses due to an insured interruption of production on your premises. This does not contemplate an indirect exposure such as a shutdown or power outage at your local power substation. An off premises power extension, when added to business interruption, would cover this exposure subject to a waiting period of 8 to 48 hours.
Such coverage can also be broadened to include water and phone lines.
Coverage may also be extended to direct damage to work in process caused by a power failure.
Pollution / Contamination of Your Property
Property policies provide only nominal coverage ($10,000 or less) for clean-up of contaminated property following a covered loss. If your company has a serious exposure that could result in contamination of your own property and large clean-up costs, consideration should be given to increasing this limit or purchasing specialized coverage.
Mechanical Break-down coverage can be provided by the addition of an endorsement deleting these excluded perils or by a separate policy.
Property at Any Other Location
Most standard property insurance contracts define the coverage territory as a) The United States of America; including its territories and possessions; b) Puerto Rico; and c) Canada. Business Personal Property away from your premises and outside of the coverage territory i.e., temporary warehouses, employee homes, contractor sites or contract research organizations is not covered, but such locations can be covered under Business Personal Property at Other Locations and under a Foreign Property policy.
Property in Transit
Coverage is available for goods in transit domestically or worldwide.
Research and Development Documents
Because the technology industry is predicated on technological advancement, technology firms spend a great deal on research and development. Start-up companies with little or no income are using capital that may be irreplaceable to develop and introduce products into the marketplace. For many companies, the loss of research and development documentation processes or cultures and resulting products or samples can have a disastrous financial impact.
The Loss of Research and Development Documentation form not only covers the cost to reproduce research and development documentation, processes, or cultures, it also provides extra expense coverage to enable you to get interrupted projects back on track.
Business Personal Property that is in the custody of any one salesperson but used only for sample purposes. Coverage must be specifically purchased.
Stock Throughput Policy
Through this vehicle, coverage can be provided for all inventory, regardless of its’ location. The policy covers inventory while at named locations, or while in transit anywhere in the world. The coverage is written on a marine policy form so contractual terms are extremely broad.
Valuable Papers and / or Accounts Receivable
Property insurance does not adequately cover a) the inability to collect your receivables, or b) lost information that must be reproduced as a result of damage to your records by a covered peril. Though coverage is inexpensive for these exposures, the best protection is duplication of the information stored at another location.