...situation where business operations are suspended or adversely affected as a result of physical damage to the property of others.
In these situations, indemnification for time element losses arising from damage to the property of a dependent yet separate operation, is provided by contingent time element or dependent properties coverage. It is important to note that the existence of such coverage is only the first step in what is often a complex road to recovery. As with many insurance policies, the language is arcane and often difficult to understand.
There is an insurance underwriting axiom that no two policies are created equally — meaning that every policy has different terms and conditions, exclusions and limitations that significantly affect the scope of coverage that is available in a given situation.
The inherent challenge in dealing with a contingent time element loss arising from the disaster in Japan is further exacerbated by the multitude of very complex coverage issues resulting from the occurrence of three separate and distinct perils: earthquake, flood and nuclear radiation. Identifying which peril caused or contributed to the loss, either independently or concurrently with another peril, is an extremely significant factor in assessing coverage.
It is rare that contingent time element coverage comes into play and as a result, there is limited precedent, custom, and practice to help one navigate through the loss measurement and loss adjustment process. The first step in the time element loss evaluation process is to read the policy thoroughly and become intimately familiar with every provision and term. This may seem self-evident, but it requires emphasis nonetheless. A colleague in the industry once described an insurance policy as the least-read best seller. Regrettably, this is true. Under the current circumstances, anyone who is confronted with a potential contingent time element loss would be very remiss not to thoroughly study the policy. To do otherwise will serious compromise one’s ability to recover the maximum benefits that may be afforded by the policy.
As indicated, no two policies are created equal. The differences in policy coverages, exclusions and language can be very significant.