Hurricane Ida’s impact on property, businesses, and people from the Gulf Coast through the northeast has unfortunately resulted in numerous deaths, significant property damage, and service interruption to over a million power and electricity customers. Many companies trying to restart their operations are addressing direct property damage and power issues, and also face supply chain problems, such as obtaining feedstock or other raw materials and supplies.
These types of supply chain issues can pose significant recovery challenges, whether your company is in the immediate area where damage occurred or further afield. As a first step, you should assess if your operations have been impacted and to what extent. You might be affected by damage or interruption to a direct supplier; to a second, third, or other tier supplier within their supply chain; or to logistics services providers, such as shippers and ports. In addition, you should investigate if damage to your customers will impact their ability to receive your goods or services, which could result in a contingent business interruption claim.
To reduce the potential for financial impacts on your business and prepare for a possible contingent time element claim, you should:
- Assess and document the specific nature of the damage and the cause of impact on your customers’ and/or suppliers’ operations, as well as the expected duration of the interruption (period of restoration).
- Explore how much inventory is in your supply chain, as the effects of the loss may not appear immediately and as customers and/or suppliers may return to operations at reduced capacity, with customers like yourself on strict allocations.
- Explore if there are alternate suppliers available to minimize the disruption to your operations.
A careful review of your insurance policies can help determine if a contingent time element claim could be filed. This includes understanding:
- Is contingent time element coverage provided in the policy?
- What are the limits/sublimits for this coverage?
- What is the deductible/self-insured retention?
- Is coverage for named customers or suppliers only, direct customers or suppliers, or second/other tiers?
- Does coverage for all perils and extensions of coverage apply to contingent time element?
- Are there any other restrictions or limitations that might apply to contingent time element coverage?
Contingent time element claims can be among the more complex ones to file and manage. Having a good understanding of your potential loss and coverage, established communication protocols with your broker and insurer’s adjustment teams, and the right claims advocacy team representing you are important in helping your claim process to move forward smoothly and returning to normal operations.
