Hurricane Ian: Prepare for contingent time element claims

Contingent time element claims can be among the more complex ones to manage. With that being said, having a good understanding of potential loss and coverage is critical.

Palm trees blowing at hurricane

Hurricane Ian made landfall in Florida as an extremely dangerous Category 4 storm. Catastrophic winds and storm surge have thrashed the coast along southwest Florida, with much of the state gearing up for significant impacts to people, property, and power and electricity services.

The first priority for businesses should be to focus on their people, who may have experienced personal losses. It also is critical to avoid putting anyone, whether your own employees or others assisting with your claim, in unnecessary danger as you start collecting information about sustained damages to aid your recovery.

Post-storm impact could prolong recovery

As companies try to assess the extent of damage to their properties and restart their operations, many are expected to face power issues and access challenges. Further, already strained supply chains may make obtaining critical repair and rebuilding supplies or raw materials difficult and more expensive, hindering your ability to conduct normal business operations and serve your customers.

And even companies that did not experience physical damage could have their post-storm operations disrupted due to supply chain issues. Your critical suppliers, or their suppliers, could have experienced damage or have their operations interrupted. Logistics services providers, such as shippers and ports, could also be experiencing delays. 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.

It is important to work with your broker or insurance provider to carefully review your policy documents to determine whether you can file a contingent time element claim. This includes understanding:

  • Is contingent time element coverage provided in your policy?
  • What are the limits/sublimits for this coverage?
  • What is the deductible/self-insured retention?
  • Is coverage available only for named customers or suppliers, direct customers or suppliers, or second/other tiers?
  • Does coverage for all perils and extensions of coverage apply to contingent time element losses?
  • Are there any other restrictions or limitations that might apply to contingent time element coverage?

3 actions to prepare for potential contingent business interruption claims

Contingent time element claims — where you are affected by the impact of the storm on third parties — 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.

To reduce the potential for financial impacts on your business and prepare for a possible contingent time element claim, you should take three critical actions:

  1. 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).
  2. 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.
  3. Explore if there are alternate suppliers available to minimize the disruption to your operations.

In addition to contingent time element exposures, the storm can also generate interdependency losses if damage to one of your locations impacts the ability of other locations to conduct normal business operations. These exposures should be explored prior to and immediately after a loss.  

Preparing for and handling a property loss

Our in-depth guide will help you through the process of managing your property insurance claim process.

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