Does Business Interruption Insurance Cover a Power Outage or Storm Closure in Connecticut?

Short answer: Business interruption (business income) insurance replaces lost net income and continuing expenses when your business has to stop operating because of covered physical damage to your property, after a waiting period, often 72 hours. A power outage caused by damage away from your premises, like the widespread outages after Connecticut's major storms, is usually not covered unless you added utility services (off-premises power) coverage. Flood damage excluded by your property policy also means no business interruption payment.

How business income coverage works

• Trigger: direct physical loss or damage to your property from a covered cause, such as fire, wind or a burst pipe.
• What it pays: net income you would have earned, plus continuing normal operating expenses such as rent, loan payments and payroll you choose to keep.
• How long: the "period of restoration," from the waiting period until the property should reasonably be repaired, sometimes extended for a period after reopening while customers return.
• Extra expense: costs to stay open or reopen faster, such as temporary space or expedited equipment.

The Connecticut storm problem: power outages

Connecticut's biggest storms, including Irene and the October nor'easter of 2011, Sandy in 2012 and Isaias in 2020, left hundreds of thousands of customers without power for days. For most businesses, the loss came not from damage to their own building but from the grid. Standard business income coverage does not respond to that. You need:

• Utility services – time element coverage, which extends business income to interruptions caused by damage to off-premises power, water or communications facilities. Read whether it includes overhead transmission lines; some forms exclude them, which removes most storm outages.
• Spoilage coverage for refrigerated inventory, essential for restaurants, grocers and medical practices.
• A backup generator and a written outage plan, which reduce both the loss and, with some carriers, the premium.

Other gaps to check

• Flood. If floodwater damages your building, standard property policies exclude it, and business income follows that exclusion. NFIP commercial policies do not cover business interruption. Coastal businesses need private flood with time element coverage; see flood insurance in Connecticut.
• Civil authority. If authorities prohibit access because of damage to nearby property, coverage may apply for a limited period, often two to four weeks.
• Dependent properties. If a key supplier or the anchor store that drives your traffic is damaged, you need contingent business income coverage.
• The limit. Calculate a realistic worst case: months, not weeks, for a major fire. Many businesses carry too little, or a policy with a coinsurance clause they do not meet.
• Cyber outages. Ransomware shutdowns are a cyber-policy claim, not property; see cyber liability.

Do this before storm season

• Find "business income" and "utility services" on your declarations page and note the waiting period.
• Confirm whether overhead transmission lines are included.
• Keep monthly financial statements accessible off-site; they are how the claim is measured.

New England Insurance, an independent Connecticut agency in Bridgeport since 2012, reviews time element coverage for Connecticut businesses. Request a review or see commercial property insurance.