Does Business Interruption Cover Power Outages?

A power failure can interrupt operations without damaging the insured’s own building. Standard business-income coverage may require covered physical damage, while a utility-services endorsement may extend protection when physical damage affects an off-premises power source. NAIC notes that such clauses can carry distance limits and exclude some perils; Texas guidance also warns some policies exclude power losses not caused by a covered event.

Read the utility-services and business-income forms together. Check whether power lines or generating equipment must be physically damaged, the covered territory and distance, waiting period, and limit. For refrigerated goods, separately confirm spoilage coverage and its trigger.

A business may also have a spoilage loss even when it can reopen quickly. Document the outage, its cause and duration, the affected utility equipment, and discarded stock, then compare those facts with each applicable endorsement before estimating a claim.