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Protecting Your Property with Policy Extensions

Details Matter in Insurance

Before renewing your property insurance policy (or signing a new one), always ask your insurance broker for a policy-and-coverage review. The goal is to ensure that your coverage is responsive to known risks and that unknown risks are understood—before the event. Consider the following example.

In 2015, a manufacturing plant lost an entire weekend of production when a railroad tanker carrying hazardous material overturned and authorities required everyone within a one-mile radius to evacuate. Reviewing its policy coverage for civil authority, the manufacturer discovered that its policy offered $10M of coverage, but that the causing event had to be within 1,000 feet of the insured property. Fortunately for the manufacturer, the railroad reimbursed them for the loss of production as part of their liability settlement, but they could have faced some challenges getting a claim paid through their property insurer. This event was a wake-up call for the manufacturer.

Policy Extensions Can Fill Risk Gaps

Property insurance policies are written with coverage extensions or additional coverages that you may not know about or have thought of, such as automatic coverage, course of construction, civil authority, contingent time element and service interruption. In addition to knowing about their availability, it is important to understand whether they have special provisions such as time or distance limitations, waiting periods, time-sensitive claims reporting or named/unnamed restrictions.

As a trusted advisor, your insurance broker should review with you—in plain English—coverage extensions in light of your unique risks and operations, and educate you about the details. For example, a company had millions of dollars of equipment that was highly reliant on available power to operate. Hylant’s review disclosed that 18 hours without power would cost the company millions of dollars in equipment damage but wouldn’t trigger insurance coverage; their service interruption policy extension waiting period was 24 hours. We successfully negotiated the reduction of the waiting period to 12 hours to properly safeguard their investment.

If you would like help reviewing your property insurance coverages or assessing your risks, please contact your Hylant client executive or Andrew Urban of Hylant’s Property Practice at 419-259-6048.