Contingent Business Interruption Issues Continue Following Disasters in Japan

Contingent Business Interruption Issues Continue Following Disasters in Japan Adjusters International Disaster Recovery Consulting By Anthony J. D’Amico, SPPA & Harvey M. Goodman, SPPA In today’s complex world of international supply and service chains, many business operations depend upon independent third party operations to provide or furnish raw materials, intermediate components, supplies, services, and even finished goods. These dependent relationships create a risk of loss should the “dependent” or “recipient” property be damaged, thus preventing the primary policyholder from providing or receiving crucial goods and/or services. As many readers know, time element coverage carried on one’s primary business operations is triggered only when that subject property sustains physical loss or damage resulting from a covered cause of loss. Time element coverage does not apply to a E-Advance Edition EDI TOR’S NOTE The recent earthquake and tsunami that struck Japan, caused loss of life and property damage of untold proportions. It will take years if not decades for this nation to recover from the catastrophic losses suffered by its people and the land. Japan is an integral part of the global economy and the entire world will continue to be adversely affected by the economic impact of this disaster. Businesses worldwide are now beginning to assess their own economic and financial issues and are developing strategies to facilitate a recovery. Insurance will play a major role in the discussion and development of a viable recovery strategy for many businesses affected both directly and indirectly by this natural disaster. The purpose of this article is to focus on the coverage issue that may be the most relevant to many United States businesses. That issue is contingent business interruption, also known as dependent properties coverage. —Sheila E. Salvatore, Editor

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