Business Interruption (BI) insurance is one means of risk mitigation. A comprehensive policy offers financial protection in the event of unanticipated downtime. However, project owners should still consider self-insured mitigation options.
Sometimes owners may think they are already covered sufficiently against downtime as a result of the global cover taken out by the project contractor or manufacturer. In reality, these policies more often than not do not cover the insurable interests of the owner in terms of reducing operational downtime.
Secondly, there is an inherent misconception about the cost of BI coverage. This cost can, in fact, be alleviated by evaluating potential project bottlenecks early in the development stage and addressing these risks in a prudent manner.
The following areas have been highlighted for consideration for business interruption contingency planning:
- Crane Availability
- Lender Financing
In all scenarios, proper upfront planning is crucial to reducing the downtime of a loss event. From knowing the local officials where the site is located to managing a spares inventory, the more prepared one can be, the better.
Just as important is notifying your insurance provider, as soon you believe you have an insurable event. All too often, insurers see claims where there has been a delay in notification or the insured’s site management team have initially underestimated the scale of the issue, believing they could handle it, only to realize it was more challenging than first thought. In both cases, the delay compounds the overall time taken for the necessary resources to come together to fix the damage.
Notifying insurers as soon as possible lets them offer more assistance to the insured. Insurance providers may have the potential resources to remediate and resolve a situation faster than the insured may be able to manage on their own.
In all cases, it’s crucial for an insured to have a plan in place to address the circumstances for each of these bottleneck areas to help mitigate project downtime, and loss of productivity and profits.
By Phil Pavey, Underwriter, GCUBE Insurance Services
Filed Under: Insurance, News, O&M