Australia’s electricity power supply (or rather, frequent power failures) is an issue that can have significant negative impacts on businesses small and large. Shield Insurance Brokers recommend its clients take out the most appropriate risk cover for their circumstances, however insurance protection for material and financial losses related to power failures is somewhat limited.
We can obtain cover for certain circumstances:
- Physical loss or deterioration of refrigerated goods – this is generally covered via a machinery breakdown policy regardless of the underlying cause.
- Business interruption insurance will generally cover a business for its financial losses subsequent to an insured event at a given insured location. In most cases, the policy provides a limited addition piece of protection against the failure of “public utilities”. This does come with a few small provisos (namely, the interruption has to be caused by an insured event damaging the utility, such as a fire, storm, earthquake etc, and most policies have a 72 hour excess clause). Generally speaking, business interruption insurance cover will not usually apply for circumstances such as:
- Load shedding by the authority
- System overload or breakdown of infrastructure
- Mitigation risk or the authority shutting the system down to prevent a potential loss e.g. on a high fire risk day.
Beyond appropriate insurance cover, there are certain steps a business can take to mitigate against prospective losses due to power outages.
- Install a back-up power generator, especially for critical services.
- Computer systems should have an adequate shutdown capability via a UPS (Uninterruptable Power Supply).
- Perishable stock facilities should have a lockdown procedure to keep the stock at an adequate temperature for as long as possible.
- Perishable stock facilities should have 24-hour monitored temperature alarms to alert authorised people in the event of an after-hours power outage.
To gain an independent, expert perspective on pertinent risks and appropriate mitigation and protection strategies for your business, please speak with any of our experienced insurance Brokers.
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