Last Thursday’s chemical leak in Charleston, West Virginia, has cut off water to nearly 300,000 people. Businesses in the area have been forced to close, and must remain closed until the city can decontaminate the water supply. Business interruption losses resulting from the chemical leak are expected to be costly. If you purchased a commercial property insurance/business interruption insurance policy for your business, you may have coverage for losses caused by the chemical leak, including lost income and extra expenses incurred because of the forced closures. Commercial property/ business interruption policies often extend coverage to situations involving lost revenues that result from damage to and/or interruption of critical services (such as water supply), and/or damage to property of suppliers or customers that in turn impacts the insured’s business.
Protect your claim.
At your earliest opportunity, we recommend that you take the following steps to protect your potential claim for business interruption losses and extra expenses caused by the chemical leak:
- Give Notice: Contact your insurance brokers (or your insurance company, if you do not have a broker), and direct them to immediately place all potentially applicable insurers/insurance policies on notice of your situation and possible claim.
- Review Your Insurance Policies: Assemble and review your insurance policies, ideally with the input of a coverage professional, to understand the extent of available coverage, as well as potential limitations on available coverage.
- Collect Evidence: Document and quantify as much of your loss and the impact on your business as you can, as promptly as you can. Preserve evidence of the type and extent of damage you have suffered. Keep accurate and detailed records of how much you spend, and why, so that you can present this evidence to the insurance company as your proof of loss.
- Build a Team: Establish and organize your claim team, and assign responsibilities among the team members. Likely members include in-house counsel, risk managers, a broker representative, a business representative, internal and/or external accountants, and a pro-policyholder coverage attorney. Designate a person to manage customer relations and a person to manage contract fulfillment.
- Protect Privilege: Internal communications about your losses and potential claim may be privileged, particularly communications with or relating to advice from your in-house and/or coverage counsel. Establish lines of communication that will protect these privileged communications from inadvertent waiver.