A chemical manufacturer's operations were interrupted when gas could no longer be delivered by its retail gas supplier. The retailer, in turn, could not make deliveries because of an explosion that halted the operations of its gas producer. The chem manufacturer filed a claim under its contingent business income coverage. It sued its insurer after the claim was rejected.

Click here to see the court's opinion on whether a valid contractual obligation existed that would trigger coverage for gas supply-related business interruption loss.

It's always useful to remember the basic fact about an insurance policy: it is a contract. A coverage obligation exists only when payment is made for coverage and when a situation that is eligible for coverage takes place. Many losses can harm a company, but reimbursement is due only to certain losses.

Time element policies can provide protection against loss involving the inability to continue operations. Originally, the protection against lost income had to be due to the occurrence of direct physical damage caused by an eligible peril. Because coverage depends upon a separate event, time element forms are attached to base commercial property forms that determine the types of losses that are eligible for business interruption reimbursement. Further, time element forms contain additional definitions and terms that affect coverage availability.

Click here for an excerpt of wording on Time Element coverage found in the ISO Commercial Property's coverage analysis in PF&M.

As serious as storm, fire or theft may be, those are direct losses. It takes time to make repairs or arrange replacement and, as the adage goes, "Time is Money!" Businesses are ongoing so when operations are halted, income is lost. Often, whether a business is able to resume depends on having financial sources of recovery available.

Click here for an excerpt on the scope of protection offered by Time Element coverage found in Gordis in Advantage Plus.

Of course, we come back to a key issue. Indirect loss can be as great or even a greater threat to a business than direct damage. Even a greater concern is that serious indirect loss can occur in a manner that is not protected under the vast majority of commercial property insurance policies.

Of major concern to us all is the impact of the Coronavirus, which has already slammed many businesses and the country's economy. The insurance sector is very busy monitoring and dealing with customers who seek assistance with a dangerous challenge to business survival. Litigation is already occurring with efforts both to secure or deny protection. Legislators are beginning to consider laws that may alter how insurers are expected to respond to a catastrophe-level source of loss. While insurance is, as of yet, a limited source of protection, the broader world of risk management may provide more help.

Click here to see a full copy of an article offering insights on pandemics from a 2010 issue of Rough Notes Magazine in Advantage Plus.