insured premises, the more precise language in this form that excludes failure
that occurs outside the insured’s building still does not provide coverage for
the loss. The power lines were outside a
building on the plan member’s premises,
so the extra expense of the generator
would not be covered.
temperature change endorsement, which
provides coverage for complete or partial
failure of electrical power. The endorsement deleted the power outage exclusion
of the underlying form.
Read together, it is apparent that the
dorsement provides coverage for com-
plete and partial failure of electrical
power—thus making it a covered cause
of loss—the windstorm or hail exclusion
would allow coverage for the loss.
Spilled Milk and Perishables
Another type of loss that frequently
accompanies power outage is spoilage
or other losses to perishable inventory.
An illustration of this type of loss comes
from an FC&S subscriber whose insured,
an ice cream company, did not experience direct damage from Hurricane Irene
but lost inventory because of a power outage that occurred after the hurricane.
The carrier denied coverage because
the form contained the North Carolina
Windstorm exclusion, which excludes
any loss because of wind. The carrier said
that the wind was the cause of the loss of
power, thus no coverage was available.
The insured, however, also carried a
While typically Property Coverage Forms exclude
damage because of power failure away from the
insured premises, the more precise language in
this form that excludes failure that occurs outside
the insured’s building still does not provide
coverage for the loss.
forms do provide coverage for the loss of
inventory because of the power outage.
The windstorm or hail exclusion states
that if windstorm or hail results in a covered cause of loss other than rain, snow,
sand, or dust, the insurer will pay for the
physical loss or damage caused by the
covered cause of loss.
Because the temperature change en-
it is important to read all applicable
provisions and exclusions to determine
how damage caused by power outages
may or may not be covered in different
Susan L. Massmann, CPCU, is an assistant editor for FC&S. She may be reached